Consider the following information regarding Sensation Ltd, a listed company on ASX in Australia.Year 0Year 1Year 2EPS1.611.79DPS0.640.75Book Value of22.00ShareRequired Equity6%ReturnShare Price on23.80ASXRequired:a) Assuming Sensation will close operations in 2 years' time, value an ordinary share in this company using theResidual Income Method.b) Is Sensation Ltd fairly valued on the ASX? Please explain fully your response.

Residual Income Valuation is a method in which the value of a stock depends on the present value of…

Answered: Consider the following information…

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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The summarized statements of financial position of PT ABC and PT DEF as of December 31, 2018 are provided below. If PT ABC acquired a 30% interest in PT DEF on December 31, 2018 for Rp225.000 and the equity method of accounting for the investment were used, the amount of the debit to Equity Investments would have been ?
Question1 a) On 31 December 2018 Pee Plc purchased 80% of the share capital of Cee Ltd for £60,000 when its accumulated profits were £30,000. The individual Statement of Financial Positions of PeePlc and CeeLtdat 31December2020were as follows: Рее Cee Cee Ltd £ £ Non-current assets: Property, plant and equipment 160,000 50,000 Cost of investment 60,000 00000 220,000 50,000 Current assets 30.000 10,000 Total assets 250,000 60,000 Equity and liabilities Ordinarysharesof£leach 100,000 20,000 Retained profits 150,000 40,000 250,000 60,000 Consolidated goodwill is subject to an annual impairment review. No impairment has been detected to date. Required: Prepared the consolidated statement of financial position for the Pee group at 31 December 2020. Pee plc has a policy of valuing Non-Controlling interest at their share of net assets at acquisition.
The following is an extract from the trial balance of Tempo Ltd on 30 June 2022:£Land and buildings 114 000Equipment 210 000Investment (80 000 shares of £1 each in Rhythm Ltd at cost price) 650 000Inventory (30/6/2008 - £382 000) 418 000Trade receivables (30/6/2021 – £180 000) 206 000Cash and cash equivalents 92 000Share capital:Ordinary share capital including premium 450 000Preference share capital 200 000Retained earnings:Balance – beginning of year 160 000Retained profit for the year 40 00012% Long term loan 420 000Trade payables (30/6/2021 – £190 000) 210 000Tax payable 110 000Dividends payable 100 000Additional information:1. Issued share capital:- 400 000 ordinary shares of £1 each- 40 000 10% preference shares of £5 each.2. Gross profit for the year amounted to £1 344 000 and represents 40% of turnover for the year.3. All sales and all purchases are on credit.4. Income from investment for the year amounted to £24 000.5. The dividends payable represents the total amount of…
Required: (a)Assuming a rights issue of shares is made, calculate: (i)the theoretical ex-rights price of an ordinary share in Devonian plc (ii)the value of the rights for each original ordinary share. (b)Calculate the price of an ordinary share in Devonian plc in one year’s time assuming: (i)a rights issue is made (ii)a loan issue is made. Comment on your findings.
Produce a consolidated balance sheet for Johnston Group as at 30 September 20X6 consistent with international accounting standards.
BUSINESS COMBINATION Answer it with solution:
Consider the financial statements for the REIT given below. Assume that the net revenue includes a loss of $4,000,000 on an asset sale. This REIT has issued 1,000,000 shares. Similar REITs are trading at FFO multiples of 10x. What valuation (share price) does this information imply for the REIT? Net Revenue Less: Less: Interest expense Net income O 49.2 O 129.2 O 95.2 89.2 Operating expenses Depreciation and amortization Income from operations $20,000,000 9,800,000 4,400,000 5,800,000 $ 1,280,000 $ 4,520,000

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