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Hello sir
Question in Kaplan kit:
Using equity market valueOrdinary shares of 7.8m have a nominal value of $0.25 and currently traded at ex div price 7.10.ANd economic recovery expects a share price growth of 8% in foreseeable future.
According to me calculation should be like this
7.8/0.25= number of shares 31.2
31.2x 7.1(ex div price) x 1.08 (growth rate).
But in solution they did not count growth rate and simply calculate 31.2×7.1
Why?I do not have the Kaplan Kit (only the BPP Kit) and so without seeing the whole question I cannot help you (you have not said what the question requires).
If it is labelled as a past exam question then tell me the name and the exam because I have all past exam questions.
Sir it is MCQ section B Business valuation question.
Required:
Sir it asks how will we value the business using equity market value.The question is
Ordinary shares of 7.8m have a nominal value of $0.25 and currently traded at ex div price 7.10.ANd economic recovery expects a share price growth of 8% in foreseeable future.Sorry to bother you again
Again, I need to see the whole question.
However, if the 7.8m is the total nominal value in $’s, then there are 31.2m shares in issue and the current market value of the shares is 31.2 x $7.10 = $221.52.
yes this is what answer is in the solution. So growth in share is not incorporated when determining the value of the business on the basis of equity shares.
Right
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