The following particulars are available in relation to A Ltd. : (i) Equity Share Capital - 8,000 equity shares of ₹100 each fully paid. (ii) 2,000, 8% Preference Shares of ₹100 each. (iii) Reserve and Surplus - ₹2,50,000

Calculation of Earnings of Equity Shareholders Particulars Amount (₹) Earnings before depreciation, Interest and tax (EBDIT) 5,48,000 Less: Depreciation (1,00,000) Earnings before Interest and tax (EBIT) 4,48,000 Less: Interest on Debenture (10% of ₹8,00,000) (80,000) 3,68,000 Less: Profit on Revaluation of Assets (1,84,000) Operating profit before Tax 1,84,000 Less: Income tax @ 30% (55,200) Profit after tax (PAT) 1,28,800 Less: Preference Dividend (8% of ₹2,00,000) 16,000 Profit available to Equity Shareholders 1,12,800 (i) Calculation of value per share under Earning Method Expected Rate of Earning = (Profit available to Equity Shareholders / Paid up value of Equity Shares) x 100 = (1,12,800 / 8,00,000) x 100 = 14.10% Normal Rate of Return = (Earning / Price) x 100 = (1/8) x 100 = 12.50% Value of each share = (Expected Rate of Earning (ERE) / Normal Rate of Return (NRE)) x Face Value per Share = (14.1% / 12.5%) x 100 = ₹112.80 per share (ii) Calculation of value per share under Dividend Yield Method Expected Rate of Dividend = (20% + 19% + 27%) / 3 = 22% Value per share = (Expected Rate of Dividend / Normal Rate of Dividend) x paid up Value = (22% / 16%) x 100 = ₹137.50 per share