The final accounts of P Ltd. as on 31st March, 2018 revealed the following significant information: Share Capital (Fully paid up) Equity share capital — 1,00,000 shares of ₹10 each 12% Preference share capital — 20,000 s

P Limited (Year ended 31st March, 2018) (a) Valuation of Equity Shares (Intrinsic Value Method) Equity Shareholders Fund Particulars Amount (₹) Equity Capital 10,00,000 Reserve and Surplus (₹1,50,000 - ₹30,000) 1,20,000 Appreciation in Assets 2,50,000 Net assets available to Equity Shareholders 13,70,000 Value per fully paid equity share = Net assets for equity shareholders / No. of equity shares = 13,70,000 / 1,00,000 = ₹13.70 (b) Valuation of Equity Shares (Yield Method - Earning Basis) (i) Future Maintainable Profit Particulars Amount in ₹ Present average profit before tax @ 30% 5,00,000 Add: Increase by 20% 1,00,000 Total 6,00,000 Less: Tax @ 30% (1,80,000) Future Profit after tax 4,20,000 Less: Preference Dividend 12% on ₹10,00,000 1,20,000 Future Maintainable Profit available to Equity Share Holders 3,00,000 (ii) Expected rate of return = FMP available to equity share holders * 100 / Paid up Equity Capital = 300000 * 100 / 1000000 = 30% (iii) Value Per Equity Shares (Yield Basis) Expected Rate of Return * Paid up price per share / Normal Rate of Return = 30 * 10 / 15 = ₹20 (c) Fair Value per equity share = Intrinsic value method + Yield value method / 2 = (13.70 + 20) / 2 = ₹16.85