Past Paper Question

The owners of a private company wish to dispose of their entire investment in the company. The company has an issued share capital of $1m of $0·50 nominal value ordinary shares. The owners have made the following valuations of the company’s assets and liabilities. Non-current assets (book value) $30m Current assets $18m Non-current liabilities $12m Current liabilities $10m The net realisable value of the non-current assets exceeds their book value by $4m. The current assets include $2m of accounts receivable which are thought to be irrecoverable. What is the minimum price per share which the owners should accept for the company? A $14 B $25 C $28 D $13 Answer: A They should not accept less than NRV: (30m + 18m + 4m – 2m – 12m – 10m)/2m = $14 per share. My question is why was the net realisable value divided by 2m instead of 1m which is the number of shares.