Find the value of each equity share assuming that preference shares have no prior claim as to…

Model: Intrinsic value—Pref. shareholders not having preference The following is the balance sheet of VRS Ltd. as on 31 March 2010:

Liabilities

Assets

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3,000 10% Preference Shares of Z 100

3,00,000

Sundry Assets as

10,00,000

Each
50,000 Equity Shares of Z10 Each

5,00,000
80,000

Book Value

Bills Payable

1,20,000

Creditors

10,00,000

10,00,000

The market value of 70% of the assets is estimated to be 20% more than the book value and that of the remaining 30% at 10% less than the book value. There is an unrecorded liability of Rs.10,000. Find the value of each equity share assuming that preference shares have no prior claim as to payment of dividend or as to payment of capital.

 

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