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Issue price

Forums › Ask ACCA Tutor Forums › Ask the Tutor ACCA FM Exams › Issue price

  • This topic has 4 replies, 2 voices, and was last updated 1 year ago by John Moffat.
Viewing 5 posts - 1 through 5 (of 5 total)
  • Author
    Posts
  • May 29, 2021 at 10:02 am #622146
    vavneetb
    Participant
    • Topics: 171
    • Replies: 121
    • ☆☆☆

    Hi

    I am really struggling in business valuation chapter, how do I find issue price If the cost of equity is given? By using DVM
    In question ke is 14%
    And answer says, Fair MC = lv of future dividend ms discounted at ke14%
    Divined next year is = 0.14m expected growth is 4%
    0.14m/(0.14-0.04)

    May 29, 2021 at 10:14 am #622149
    vavneetb
    Participant
    • Topics: 171
    • Replies: 121
    • ☆☆☆

    Also, is there any calculation difference between listed and unlisted companies in business valuation chapter?

    May 29, 2021 at 1:03 pm #622166
    John Moffat
    Keymaster
    • Topics: 56
    • Replies: 51583
    • ☆☆☆☆☆

    Are you watching the free lectures working through the chapters (because it is pointless using the notes without watching the lectures that go with them).

    With regard to the first question, you are not asked to find the issue price. You are asked to find the current market value and for that we use the dividend valuation formula.

    With regard to your second question, the approaches are the same for unlisted companies although as I explain in my lectures when using a PE ratio valuation we use a lower PE ratio because of the shares not being as easily tradeable.

    May 30, 2021 at 12:43 pm #622294
    vavneetb
    Participant
    • Topics: 171
    • Replies: 121
    • ☆☆☆

    I have watched lectures, could you please specify which chapter is related to business valuation, I want to study that again specifically. Thanks

    May 30, 2021 at 2:27 pm #622307
    John Moffat
    Keymaster
    • Topics: 56
    • Replies: 51583
    • ☆☆☆☆☆

    The two chapters on “the valuation of securities”.

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    Posts
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