Kalyani Ltd. has issued the following securities : ₹ 7% Debentures 4,00,000 10% Preference Shares of ₹10 each, fully paid 6,00,000 1,00,000 Equity Shares of ₹10 each, fully paid 10,00,000 Average profits of the company b

Note: It is assumed that liquidator will get remuneration @ 2% on payment made to unsecured creditors only excluding preferential creditor considering preferential creditor as secured creditor. Value of Preference Shares Rate of dividend / Normal rate of dividend x Paid up value of Share 10 / 8 x 10 = ₹12.5 Per Share Valuation of Equity shares ₹ Average profit before Interest & Tax 750000 Less - Interest on debentures (28000) Net Profit before tax 7,22,000 Less Income Tax @ 30% (2,16,600) Net profit after Tax 5,05,400 Less - Preference share dividend (60000) Profit available for equity shareholders 4,45,400 EPS = Profit available for equity Shareholders / No. of equity shares 445400 / 100000 = ₹4.454 Per Share Value per Equity Share = (EPS/NRR) * 100 (4.454/12)*100 = ₹37.12 per share