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Why might valuations of the equity and loan notes of Coral Co be necessary?
1 The company is planning to go to the market for additional finance.
2 The securities need to be valued for corporate taxation purposes.
3 The company has received a takeover bid from a rival company.
A 1 and 2 only
B 1 and 3 only
C 3 only
D 1, 2 and 3
B is the right answer.
Hello tutor!!
I understand when a company receive any takeover bid then its valuation is necessary but why valuation is necessary when company seek for additional finance?
Is the valuation requirement is compulsory for both equity finance and debt finance and what is the reason behind valuation for raising finance purpose ?Valuations of the equity and loan notes of Coral Co might be necessary for the following reasons:
1. The company is planning to go to the market for additional finance: Valuing the equity and loan notes is important to determine the current market value of these securities. This information is crucial when seeking additional finance from investors or lenders.
2. The securities need to be valued for corporate taxation purposes: Valuations of equity and loan notes are necessary for tax purposes, especially when calculating taxable gains or losses. The market value of these securities is used to determine the tax implications for the company.
3. The company has received a takeover bid from a rival company: In the case of a takeover bid, valuing the equity and loan notes is essential to assess the fair value of the company. This information helps in negotiations and determining the appropriate price for the acquisition.
But they are saying only takeover bid and raising finance are purposes to value business.
A valuation for taxation purposes is not necessary – this is FM!
The valuation is about the equity and loan notes – why might it be necessaryOnly if you were valuing for tax purposes for tax reporting and compliance
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