From the following particulars calculate the value of an equity share under yield method. 1. 5,000 9% preference shares of $100 each $ 500,000. 125,000 equity shares of $10 each, $ 8 per share paid up $1,000,000. 2. Expected profits before tax $545,000. Rate of taxation is 40%. 3. Transfer to general reserve, every year 20% of profit. 4. Normal rate of earnings from this type of business is 15%.

From the following particulars calculate the value of an equity share under yield method. 1. 5,000 9% preference shares of $100 each $ 500,000. 125,000 equity shares of $10 each, $ 8 per share paid up $1,000,000. 2. Expected profits before tax $545,000. Rate of taxation is 40%. 3. Transfer to general reserve, every year 20% of profit. 4. Normal rate of earnings from this type of business is 15%.

FINANCIAL ACCOUNTING

10th Edition

ISBN:9781259964947

Author:Libby

Publisher:Libby

Chapter1: Financial Statements And Business Decisions

Section: Chapter Questions

Problem 1Q

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