Capital structure of Sun Ltd., as at 31.03.2003 was under: Particulars Equity share capital 8% Preference share capital 12% Debentures Reserves Rs.In.lacs 80 64 32 Sun Ltd., earns a profit of Rs.32Lakhs annually on a average before deduction of income-tax which works out to 35% and interest on debentures. Normal return on equity shares of companies similarly placed is-9.6% provided: Profit after tax covers fixed interest and fixed dividends at least 3 times. Capital gearing ratio 0.75. Yield on share is calculated at 50% pf profits distributed and at 5% om undistributed profits. Sun Ltd., has been regularly paying equity dividend of 8%. Compute the value per equity share of the company.
Capital structure of Sun Ltd., as at 31.03.2003 was under: Particulars Equity share capital 8% Preference share capital 12% Debentures Reserves Rs.In.lacs 80 64 32 Sun Ltd., earns a profit of Rs.32Lakhs annually on a average before deduction of income-tax which works out to 35% and interest on debentures. Normal return on equity shares of companies similarly placed is-9.6% provided: Profit after tax covers fixed interest and fixed dividends at least 3 times. Capital gearing ratio 0.75. Yield on share is calculated at 50% pf profits distributed and at 5% om undistributed profits. Sun Ltd., has been regularly paying equity dividend of 8%. Compute the value per equity share of the company.
Essentials Of Investments
11th Edition
ISBN:9781260013924
Author:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.
Publisher:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.
Chapter1: Investments: Background And Issues
Section: Chapter Questions
Problem 1PS
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Question
![Capital structure of Sun Ltd., as at 31.03.2003 was under:
Particulars
Equity share capital
8% Preference share capital
12% Debentures
Reserves
Rs.In.lacs
80
40
64
32
Sun Ltd., earns a profit of Rs.32Lakhs annually on a average before deduction of
income-tax which works out to 35% and interest on debentures.
Normal return on equity shares of companies similarly placed is-9.6% provided:
Profit after tax covers fixed interest and fixed dividends at least 3 times.
Capital gearing ratio 0.75.
Yield on share is calculated at 50% pf profits distributed and at 5% on
undistributed profits.
Sun Ltd., has been regularly paying equity dividend of 8%.
Compute the value per equity share of the company.](/v2/_next/image?url=https%3A%2F%2Fcontent.bartleby.com%2Fqna-images%2Fquestion%2F7b7f2185-0070-4fa5-a042-ddfc58f311dd%2Fce3c2fea-2f81-4c66-b4ff-615cb27a45ce%2F9nbns_processed.jpeg&w=3840&q=75)
Transcribed Image Text:Capital structure of Sun Ltd., as at 31.03.2003 was under:
Particulars
Equity share capital
8% Preference share capital
12% Debentures
Reserves
Rs.In.lacs
80
40
64
32
Sun Ltd., earns a profit of Rs.32Lakhs annually on a average before deduction of
income-tax which works out to 35% and interest on debentures.
Normal return on equity shares of companies similarly placed is-9.6% provided:
Profit after tax covers fixed interest and fixed dividends at least 3 times.
Capital gearing ratio 0.75.
Yield on share is calculated at 50% pf profits distributed and at 5% on
undistributed profits.
Sun Ltd., has been regularly paying equity dividend of 8%.
Compute the value per equity share of the company.
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