Chapter : 7

Assets & Liabilities

valuation of exam

concept No : 1 valuation of plant & machinery TM +7M + 4 M

concept No :2 valuation of Inventory

concept No : 3 valuation of Investments
>
-
valuation of Shares
>
- valuation of Debentures & Bonds
- valuation ofright issue .

- valuation of Warrantees *
A.

Concept No : 4 valuationof Intangible Acts

>
-
valuation of Copyrights
- valuation of Good will *

>
- valuation of Brand **

>
-
valuation ofTrademarks
>
- valuation of Human Resources
concept No : 5 valuation of EVA *AA

concept No : 6 valuation ofMVA A

concept No:7 valuation of Realistate
Concept No : 8 valuational Liabilities
.
 Concept No : 1 valuation of plants, machinery
↓

As per NFRS (International financial Reporting standards] Specifies

-
Tangible Assets held to use for production Coul Supply of Goodscors Services for

Rental to others Coul Business purpose

,
-
Tangible Assets are held to use more then one accounting year
Tangible Assets
&

-/ / /

plant machinery Equipment

>
- Arts that are inseparably s /

combined with other Ants Assets used for Assets used for
Other
Includes > -
Building specific purpose Arist business
>
-
machinery in operations. operations.
>
-
equipment .

primary method :
1 .
cost replacement method 3 . Discounted cash flow
.

G cost
.

Reproduction method
* value in use = SDCIf

secondly methods Remaining : all * Recoverable = N SV

We
Amount
VIC

problem No : 01 * Imprimit Lo = BV- RA

Q
Estimating fair values equipment
fair value = Valueot Asset - Accumulated Depreciationn.
= 5, 89 , 038 -
2 79 793
, ,

= 3, 09 245 ,
 Working Note : calculating value of Act

value of Asset = costof Alt x C.y Index value

Purchase year Index value

= 4 71 974
, ,
x 317
254

= 5, 89 , 038

working Note : calculating Accumulated Depreciation

Acc .

Dep = cost (oScrap) x used Life

Life

= 5, 89 ,038 x 0 95 .
6 54
x
.

BY
= G 79 793
, ,

problem No:

41 45 240 Recoverable
Amount-netsellingprice wta
.
=

42 = 25 70H .

550
43 = 21 056
.

126 405L
.

16 016
44 = .

45 = 15 904.
RA = 126 405L .

4529 485 .

126 405 .
= Value in use

↑
concept No : 2 valuation of Inventory (stock
↑
Stock of RIM stock of FG

Stock c WIP

valuation of stock
= cost or NRV

↓
WE L

* NRV = Net Relised value of Net

selling price of Estimated selling price
* cost purchase cost + conversion cost + other cost Excludes
.
= -
·

problem No : 3

Closing stock = Netsales =

200 000 (2 45,000
,
,
,
-

, 000)
45

Stock 65 000 (58 500 x 100 = 90)

)
Opening = , ,

#) Netpurchase = 1 10, 000

, (1 25
,000
, - 5,000 - 10, 000)

Netwages = 45, 000 (46 000 ,

- 1 , 000)
S Gross
profit = 50, 000 (200 000x25%)
,
,

70, 000
 concept No: 3 valuation of Investments
Da

- Investment is a Non-Busines Ant held by a

organization it generate Income
1
.

/ ↓
Dintend Capital terrest Rent others
Appriciation
>
-
stock in Trade is not a Investment .

>
-
classification of Investment
(Holding period)
-/
↓, No

Current Investments Long-term Investments

/ ↓

period ofHolding Les then 12M periodofHolding more then M

↓/ /

valuation : cost us market value valuation Cost

=

↑ I

WEL Exception : If share value

Reduced Due to

Permanent reason
then consider
Reduced value
.

* If share value
Reduced Due to

Temporary
Reason
Then consider
costonly
 problem No: 4

valuation of Investments for XLd

particulars Amount (E)

valuation of C1

1. shares of A Ltd 250

G .
Units of UTI 166
3 .
Shares of CHA 100
570

valuation of LTI
1 shares of 4Ltd 200
G .
shares of Zud 150

3 shares of·
Wad 80

H30

provision for permanent Diminution TO

360

Total values Investment (570 +360) 870

Investmentsecurity
/
↓ Xs
~

fixed Income beaming variable Income

Securities beaming Securities
↓s ↓/

PSC ,
Debentures ,
Bonds ,
UTIsLoans Equity shares
/ ↓

It consider Accord
concept NotConsider Accord
concept
 problem No : 5

particulars No of shares
.
cost (E)

opening balance 10 , 000 2 62000

, ,

Add : purchase 2 000,

- 12 000
,
57, 200 - 3 , 19, 200

Len : sale (costof sale) 500 13, 300 ~

11 500
: 3 05, 900
,

& purchase value = 2 000 share

,
= 60, 000

Add : Brokenge = 2% 60, 000 = 1200

Less : Dividend =
2000 x 10 20%
,
= 4 ,000 v

57,200

- sale = 500 Shows = 17 ,500

2% 17 ,500
Len :
Brokerage = = 350

Lens : Dividend = 500 10x20 % = 1 000

,

16 , 150
2, 850 profit
cute sale
(12 J
13 , 300
>
- = 000
, - 3 19 , 200 = -
,

500- ?

-> Amount of Dividend Transfer to P&L alc of CTHd

.

Total Dividend (21-22) = 23 000,

11 ,500 X 10 X 20 %

Less : Divided paid 4 000

.

Add : Dividend Received 1. 000

20, 000
 Concept No : 3 1 .
valuation of shares (Vo(or) value)
↓
↓C s

primary reasons Reasons

Secondary
/ /

>
-
TAGTL >
- Rumors
>
-
Earnings ofcompany >
- political policy changes
.

>
- Internal
mat. -Environmental Ismes .

valuation = Vo

I
I ↓ ↓ s
↓ ↓,
Vo = MuofEquity VOPEXEps
= Vo
Vo ~C
NOS Vo = NA
FNS
/

Vo = Ealing Capitalisation
TNS
"felt TC1f
Vo =
CFE a VO
E
=

TNS

problem No : 6

VO =
DIXPU + PULY + XPUT1 + 94 48XPOR .

= 3x 0 893 + 324X 0 797 +

. .
3 .

5x 0 712 + 94 48X
. .
0 .
712

= 75
 Problem o : 7

>
-
Estimating valuefor 3, 000 shares

value = 3 000 shome x

,
market price per shone
= 3, 000 shares x 138 89.

= H 16, 670
,

>
- calculation of value per shonebased on Dividend with out Growth .
model

Vo E25
= F138 89 .
= =

:
0 18

>
- calculation of Dividend per shome = Amount ofDividend
Total Not shares

= 12 ,50 ,000
50,000

= F25

>
- Rate of Retur
required (v) = 98 % (given).

(a)
case
problem No:8
case(b)
closing price
= 2633 95 .

VWAP = Sum Traded Turn over

sum of traded shares
95
100 2633
.

value = = 7625957941 = E2520 93 .

2 63 395
30,25,060
= ,
,

value = 100 Shares 2520 93 .

=
2, 52, 093
 problem No :9

TA = 3 , 62, 78 008
,

H +x L = 22 30, 898
,

NW 3, 40 , 47, 10
3

E BROL 1 00 , 00 000
, ,

+ fVAL 1 , 75, 00,000

Contra
-
12 00 , 000
,

FUNA 4 ,
03, 47, 110

- NOS 10 , 00 , 000 : NOS = 1C + 10 = 10 L

caseci) Vo 40 35 .

AMGI shares 4 00,000 ,

case (ii) value 1 , 61 , 40 000 ,

()
casecii) = Compound Annul Growth Rate. 48 , 00,000 7 , 61, 40 000,

N
48 00,00x (1+G)
,
= 1 , 61 , 40, 000

48, 00 00 x ( 1 +
, 2)" = 1 , 61 40 000, , ↑ VX(1 + G)' = fV

(I+)= 1 , 61, 40, 000

48, 00, 000

(1+ G) = 43 3625
.
Step: ol = Take Root value

Step: 02 =
Apply & 12times
:
= 35 Y .

Step : 03 = =
4

Step : 04 = -n

Step :05 = +1

Step : 06 = 12times

Step: 07 =
- 1

Step : 08 = X100
 problem No : 10
calculation of Required
Rate of Return based on CAPM

u=
Rf + B(Rm Rf) -

= 0 075 + .

08 (0 055) :

= 0 .

119911 .
9%

calculation of free cashflow of Equity per share

fCff Perthme =
PS + Dep X 15% WX75% - -

Cap-X75%
= 3 15 + 2 78x 75%
.
. -
0 .
5 x75% - 3 15 X75%
.

= 3 15 + 2 085
.
. - 0 .
375 -
6 3625
.

=
2 49 .

calculation of value per share based on Growth model

cashflow with

Vo = FCFE (1 +G)
U -

= 2 49X (1 + 0 66)
.
.

0 :
119 -0 .
06

=
2 639H .

0-059

= F44 7 per share -

.
 problem No : 11

EBIT = 25, 00 ,000

In = 5, 00, 000
(3 75L+ 1 25L
. .

EBT 20,00 ,000

# TAX5Y 51 00, 000

PAT/AGN ,00, 000

15

NOS 2 50 000
: ,
: 50L-20 =
G 50, 000 Show
,

EPS G

pleratio
times
*

MPS

problem No : 12

- If Investor purchase (Non-controlling Interest) He need to be use

small Lot .

Dividend capitalization method for calculating value per share.

DPS a DPS
Vo = ,

D g -

>
- If Investor purchase controlling Interest . He need to be use
earing capitalization
method for calculating value per share.
Vo
=9 8
-

calculation : casecal (i) If Investor purchase Small Lot .

We are find
-

outing . (If
-

value per share U= 18 %)

24 13 33 per shave
company a
:

= =
.

0 18-

2 08 11 55 per shave
company B
.

.
= =

0 18 -
 case(a)(ii) If Investor purchase Controlling Interest , we are
calculating
value per share If U= 18% )

3
company = = 16 67 per share
.

a - 18
0

26
company- per share
:

= = 14 44 .

0 -
18

working note : calculation of S & DPs for both the Companies if they ,
-
-
follow 80 % Dividend pay outRatio

particulars CO4-A COY-B

PAT 3 00, 000
, 3 00,000
,

F
- >
PD 60 000 , 40 000 ,

EAEC 2 40 000
, , , 60 000
2 ,

> NOS
-
80 000 , 1 00,000
,

EPS 3 26 .

X % Dividend part ofRatio 0-8 08 .

DPSPSXPOR 2 H .
2 08 .

caseciil prefence Dividend coverage Ratio =

PAT
PD

companya stimes
-

0 =

company is = 3 00 000
, , = 7 5times
.

-
40, 000

comment :
Company - is best for Investment in prefence shans become
it has High Coverage Ratio ice 7 5 times
..
caseciil calculation of Value per if Investor buy Small Lot Company-A .

follows 70% pay out Ratio & Coy-1 follows 90 % pay out Ratio
.

companya = 21 .
= 11 67 pershare
.
.

0 .
18

G 34
company
, 13 pershare
.

= =

0: 18

Note :
Working
D
-

for COV-A = psx payoutratio

= 3X70%

= 31 .

ps for CO4-B =
2 6x90 %
:

= 2 34
.
concept No : 3 2 .
valuation of bonds & Debenture

* yield to maturity (YTM) model @) Internal RateA Return (IRR)

>
-
IR - It is maximum rate of return where pustaf =
protcof
>
-
NPV = 0

Investment
Example : =,
2 00 000 ,

CA 4, = 50, 000

42 = 1 00 000
, ,

43 = 1 , 50 , 000

NDV =? If 8 = 10 %
If 8 = 10 Yo
⑦
-
-

PVACI = 50, 000 x 0 909 + 1 , 00, 000x 0 826+ 1 50,000x 0 751

- .
,
.

= 2 40 700, ,

⑧
NDV =
PVACH-PVA(Of > = IRR
2 , 40, 700 . 00 000 ~
2

-
-
= ,

prf p pre
= 40, 700 v e

0 926
:

- ⑧
20 % ~

PUCH = 50,000 X 0 833 + 1 ,00,000x0 694 +1 ,50,00x 0 579

. . .

= 1 97, 900
,

NPV = 1 97 ,900
,
-
2 00 00
,
.

-
= 2, 100
 ERR LB Chors
+
=

0
=
.
1+ 40 700, x (20200 1)
. ·

40, 700 + 3 100 ,

= 9 51 % .

= 50 000 x 0 837 + 1 00, 000 x 0 700 + 1 50 000 x 0 586

,
.
, .
, ,
.

= 1 . 99, 750

NDV = 1.99 , 750 - 2,00 000 ,

* YTM = If is Rate of Return where prof Benefit is equal to prof stock.

>
- Benefit =
prof Interest + prot Redemption value.

YTM = L R
.
+ prof Benefit @LR R-LRD
Benefit L-VABenefit AR

problem NO : 14

years anflow Punt/puta 10% PVI /15% PV2

1 -
H 100 3 17
.
317 2 85 -
285

4th 1 000
. 0 683
.
683 0 :

574 572

ProCIf 1 000
, 857

Es Proof 900 -
900

vof NetBenefit 100 H3

>
-

YTM = -
0 1 - 100 x0 .
05
100 + 43
=
13 . 5%
-
-
>
-
valuation of zevo coupon bond = Redemption value x puf(ny)
↓
- No-Interest

* Benefit = Investment-Redemption

problem NO : 16

Po = Annul Benefit xprf cry ny) . + Redeemable value x pufcryny)

Po = 100x14 % X VAf (16% by) + (fr+Mem) x pVf((6% 6th)

= 14 x 3 6847
.
+ 102X0 H10 .

= 93 41 per shave
.

* Immunization : Auto correction) of bonds ****

↓, /
market Intent Rate
Risk Risk
-

In markt what changes Happen

are the ,

I need Invested amount.

same

Interst Rate Risk I

Reinvestment amount set-off with prot price of

Bond MarketRisk
puf
Intent Rate Risk -
.....
1
&
1 ↑

O 1 2 4

f
=
· mark Risk

-
-

, 000
0

v
calculation of Investment Required if Market Rate is 8%

period Interest Bond value fV/fV Amount

↑ 54H =
S4X(+ 0 08/4 .
7 40

2
SHH = 54X (1 +0 0013 . 685
2
3 STH = 5X CH0 00) . 635
H
5HH = 5HX (1+ 0 . 081" 588

5 5 = 54(10 08/0 .

544
6800+544 = 7 344X 0
,
.
926 6 ,800
10 000
,

calculation of Investment Required if market Rate is 6%

-

1 ST = 544x (1 + 0 0654 .
687

2 54H S4X CH0 0633

=
.
648
3 SHH = 54X (1 +0 .
0632 61)
H /
STY = SUX (10 06) .
577

5 57H = 544x (1 + 0 06)0 .

54

6800+54H = 7344X 0 943 .

6928
10 000
,
-

calculation of Investment required if market Rate is 10

%

A EHH =
796

2 54H =
T24
3 SHH F 658

H 54H
=
598

5 5H
=
54H
6 800+544
, =
7344X0 909 .
6676
-

10, 000
-
 Re-Int
u
value Z set-off
- pr( PVC
↑
companision blu 8% to 6 %
IR = 3 ,200 3,78
-

MR = 6 800
, 6 930
,

MR (a)
-
8 % to 10 % PVf(y) >
-
PVC)
-

O
IR 3 200,
3320 ↑
.
(A) + 120 URR

MR 6 800
, 6680 ( -
10 MRR
-
A
Concept No : 3 .
4 valuation of warrants
↓

is a
It long-term call options issued by a company
usually attached with Equity shareas Debt Instruments
,
giving right to buy Equity debt at a fixed price in future
.

* Minimum warrant price (Marketprice-Excise Price) x Swap

=

x warrantpremium = (market priceof warrant Minin Warrantprices -

problem No: 19

casecul minimum price of warrant =(MP-EP) X SWAP

= [0 =
11 71) XI
.

= O

case(b) warrant premium = (MPAW -

Mini of 2)

= 3 = 0

case(c Mpw = 6 38 -11 7/ x 1

. . = 4 67 . v

Wp = 9 75. -
4 67 . =
5 08v
.
concept No : 3 .
3 valuation of right issue
.

MRF 100
shares
↓
had
shyam=225
O Rightism 25000
MS
:1
Ratio O
14
v -
0024
10 = Nawin
piennt
-
↑
↑

-
~
-
↓s
As Xs

Reject Transfer
Accept
~ = I0Sha X/U = 140 ..

Existing Capital = 1008hx25 =2500 , =

-
100V

240
- submp = 100% = 10

J
V
-
-

2, 640
-
-

Aug nice as
Tentical price &
= 2 500 + 140
,

100 + 10
=
O 24

Ex-Right price
Lush
25 loch
=

=Right Ep
TNS
Company
* issue shares at Discount par s premium to
,
existing share holder
for the purpose of procurement.
capital
Le
↓ ↓ ↓
Accept it (subscribe Rejectit (Lapse) Renounce it(sell)

>
-
values right = current marketprice -

Ex-Right price
↓C
cum-right prices Themical Ex-rightpriceas

Agric .

>
- Thenifical x-right price = No -
A Shares CMP #No o.

Rights x -P
Total No o Share after right issue
·
.

problem No : 2O

given Information .

Capital
* Requirement = 24C

* used Reserves = 9C

x- Existing ESC = 2 40 .

* CMP = 345

* EP = 250

calculation of Ratio of Rights

Rightshareave
casecal = re
=0
- 25

WN : Ol =
Existing Shows =

=
ESC G 40
.

= 24 L shares
.

10

:
Amyption FV = 10 each
 Wi : 02- right shares = Right share value =
- 6
P

Additional fund = 2HW

Es Reserves = ↑ o

Raising fund through RIS .

150

case(b) calculation of value of

the right per share & value ofthe Right
per right
valuedthe
right per share =
CMP-ERP
4 stu = 3H5 =
E326
=
= F19

ERP E C + RIC 2 HW + 150

E326
. .
= =
=

TNS 0 .
3C

value the
right per right = vot Right per show x Swap
= 19x4shon
576
-
=

casec) calculation of Gain Loss if He subscribes the had 100 shaves

Existing capital = 100 shares x 345 = 34 500

,

+ subscription = 100025x250 = 62,50

40,750

values shares after right issue - Shan after right ,sho

X
Ex-right price
= 125shares X 326

= 40,750

> NO Gain
- NO LOSS
 case(iv) If He Rejects
can't marke value & Before Right issue = 100sh x 345 = 34 500
,

market value after

right Ishu = 100shmx 325 = 32 600,

Loss (1900)

Case (v) If He Renounce

valuet sale =
Right/snux Ep = 25show x 250 = 6250

+ Add : opportunity (LOSS) = 1900

81 50
,
-

No Gain/NO Loss
Concept No : 4 valuation
Intangible assets
concept No : 4 1 .

valuation of copy rights

↓
↓c ↓ f
as
per Q& primary Secondary
method methods
↓1 -
Discounted case other then DCM-

flow Method .

value of
copyright = proffuture .
Economic Benefit

conceptNo : 4 3.
valuation of Brand
. (complete expensions given by product as
service)

PUMA UMA DUMA AMA

↑ Dais 2 500
,
1 500
, 799 299
v V

Brand value = 2500-1 500

,

=
1. 000
 Def : A brand is more than just a name or
Logo. It is theIdentify perception
,

and promise of a Business , product , or service in the minds of customers.

Asper CMAI : A brand Represents Intangible value ,

such as Goodwill,
customerLoyalty Reputation & Recognition that gives
, , a

.
company competitive advantage

formulas : Brand value # Brand facings

-
-

Brand Earnings
=Branded Income XXX

6) Un-branded Income XXX

BrandEarnings XXX

valuation = Brand Earnings

J

Note: calculation of Brand Income & Un-Brand Income

Brand un-brand
A -
Sale Cunits x BSPPO] CUnits UBSPPU)
13-cost (units BCPUJ (units UBCPU)
C . -
RED Cumts RDCPU) nil

PBT XX X XXX

TAX XXX XXX

PAT Net Income XXX XXX

 Note: 2 calculation of Brand Earnings for Alternative problem
.

Profit Before Dep & Tax

= XXX

+ Non-operatingExpenses XXX
-

Non-operating Incomes XXX

Brand Income X XX

x Inflation factor XXX

Inflation adjusted BI XXX

X
weights XX X

product of B1 XXX

Less : Ta X XXX

Brand Earnings XXX

& & x times XXX

Brand value XXX

Note : 02 Inflation adjustment .

I
/
Yo ↓
values given is
%

given
↓, ↓

No Issue consider it please calculate value

&

-//
-

/
10 % 202315 %
2024
20 % 202595% 2026
/
↓1
100v
↑ 120 s
↓C ↓ Ye

x Inflation factor 1 725

. -S
1 1 25
.
A

(1 .
15 x 1 2x 1 25)
. . (1 2x / 25)
. .
ethods :

/ ↓,

primary secondi
1 ↓o

X DCfM(p:23) Others
/
* EC
p:26
I
↓y x
valuation Based valuation based
on Units Information on Inflations , weights
s Information .

C
P : GH P : 25
A AsA
WB : 4 5 , G ,

problem No :25
Estimation of Brand value for SHd based on EarningsCapitalization method
.

particulars 2015 2016 2017

EBIT 75 8525 ↑ 50

Add : Non-operating > (LOS) E O 18

12
Less :
Non-operating Income 7 25 8
.

GROSS BE 66 78 x68

x Inflation 1 2535
.
1 .
15 #

(1 .
09 X 1 15) .

Inflation adjusted BE 82 731 :

89 7 .
160

x
weights A 2 3

product 82 731 .
179 H .
480

weighted Arg BE = 82 731 + 179 4 + 480

.
.
123 689 v
.

G 43 29 .

Len : Tax 35 %
NBE 80 39.
 valuation of Brand = NBEx Capitalisation factor
= 80 39x In times
.

46
15 .

problem No: 6 (SP)

casecal calculation of Brand value based on earning capitalization If ,

they
provided WACC& Intangible Capitalization Rate.

particulars ASPER WAC15% ASPITR25%

PAT G 700
,
2, 700

Normal Return on TA (10 000X20%) , 2 000. 2000

,

) Normal Returno ITA (1 500x25%)

,
375 375

Brand
turnings 325 325

-
capitalization rate 0 .
15 0 .
25

Brand value 2166 67 .

1300

case (B) Estimation of value of Brand Based on ECM , if Capitalization

Rate is a 25%
particulars AMA(E)
PBT 15

# TAX 3

PAT 12
>
-
NON FOR TA 6

NON FOR ATA (10

·25%) 25 .
-

BE 35:

- CR 25%

BV -
IH
 problem No :26
- X
-

Industry sale N Hd market

years with Growth Share in % NHd sale NLdearings PVFIY PV

I 8 400 , 15 75% .
1323 1 58 76 .

0 869 .
137 96 .

2 16H OH
8,828 15 50% .

1367 -
0 .
756 124 01 ·

3 ,261
9 15 25% .

1412 P11 08 .
0 .

657 138 67 .

127s
↓ 9909 15 00 % 1486 222 90

23460
. .

J 10 603 ,
14 75% .
1564
6 U 345
, 14 50
% :

1645 GH6 75 .

F 12,139 14 95% .
1729 659 48 .
0 .
37697 56 :

& 12 989,
14 00 %
.
18/8 272 70 .
0 327
.
89 17 -

9 13 898
,
13 75%
.
1911 286 65 .
0 .

28H 81 40
.

10 14 ,871 13-50% 2008 301 20

.

0 .

247 74-39

value Brand 1093 85 .

Note : ol Estimating Market Share of NL

NHd =
Industry -
take brands -

Chinecheapproducts -
other brands
= 100 % - 9% -
0% -
35%

= 16%

Note : 02 Increase a Decrease of

Estimating market share for NLd
.

= 0 5%.
(4) in fB + 0 .
25% (4) in CB = 0 5%
.

(1) in OB

= 0 .
25() in NHd
 Right ofuse Initialcost+
Concept No : 4 4 .

Trademark & =
proffetuncleson
.
Discounted cash flow method

Concept No : 4 5
.
valuation of Human Resources
de
Yo
↓
↓
market
Approach cost
Approach
Approach
Income
↓/
↓ ↓ ↓

DCf EC Lever Schutz

V

calculation :
-
-

maximum salary = Expected Benefit

payable -
Actual Benefit.
Maximum Bid = maximum Salary payable
Capitalization rate
>
-

expected Benefit =
Capital basex expected Rate
+ additional Expectation

problem No : 29

Step : of computation ofExpected profit

Expected profit =
capital basex Expected RateofReturn
- additional expected return
= 3 00, 00 000 x
, ,
0 .
125+ 7 50, 000
,

=
37 ,50, 000 +7,50 000 ,

= 45,00 000 ,
Step : 02 computation of maximum salary payable

maximum salary payable= Expected profit-Actual profit

= 45 00 000
, ,
-
33,00 000
,
(given)
= 12 00 000
, ,

Step:03 computation of maximum Bid

Maximum Bid = Maximum

salary payable
J

= 12 00 , 000
,

0. 125

= 96 00 000
, ,

voy cattious praf

30-39-30-39
-

> 100 -
-
>
- 104 (1to20) praf
the
50 54 >
Cons prof
>
- - -

180
150 10-49-40-49
-

>
-
PUAF
30 + 50 54
- 50-54-> jy Cantoly) praf
-
50054 -
54 (atosyl prof

↑ to 104- praf use calculator

=

110204 + praf =A 201- PAY

cit0254-praf =
Plaf 025Y-PAD20Y
 problem No:31
Estimating valueofHuman Resources based on Las Schwarts model
.
option:ol valuational un-skilled Employees
Admition : all 100 Employees arejoined at 30y old
.

particulars salary PUAF present value

.

30 to 39 years 18,000 PA ↑ to 10y = 5 019

. 18000 X 5 019 = 90 , 342
,
.

40 to 49 years 30 000 P A
, 110204 = 1 .
240 30, 000% 1 .
240 = 37 ,200

50 to54 years 36 000 A

, 10254 = 0 .
205 36 000x 0 205= 7380
,
.

present values oneEmployee 1 , 34 922,

* No 100 Employee = 100 x 1 34, 922

, = 134 92, 200 ,

Assumption : all the 50 Employees joined at age

A 40years old
.

40 to 49 years 30 000 ,
PA to10y = 5 019. 30,000 x5 .
019 = 1,50570
,

50 to54 years 36,

000 A Into 15 = 0 820 .
36000x0
, 828 =298.08 ·

. .

prot one employee 1 ,80 378,

prof 50 Employees = 50 x 1 ,80, 378 = 90 18 900 , ,

Assumption : all the 30 Employees joined at the of 50 years .

old
age
-54
50 years 36 000P H
,
posy = 3 352. 36 000 3 352= 1 , 20, 672
,
-

prof one employee 1120, 672

prof 30
Employee = 30 x 1 ,20, 676

= 36 20, 160 ,

Total prof 180 employees = 134 , 92 200 + 90, 18,900 + 36,20, 160
,

= 261 31 260
,
,
 concept No : 5 valuation of Economic value added
/

EVA is a measure of the true economic profit -

100 10 % Co
of a coy
. It shows
How much value the coy & 15% RO1
-

creates for its shareholders after covering 5% v

the full cost of capital (including Equity capital

al,
↓ ↓ /

profit (ROI) XXX

EVA = Actual = EVA = (ROI-COC) X OCE & Investment /

-
Expected profit (COC) XX =

-
EVA = EBIT (1-T) -
[COCXOCE)
-
XXX
=
NOPAT-(KOXOCE]
= ROI) - [KOXOCE]

valuation based on EVA concept

value Capital
= Invested + prof future EVA

problem No : 34

Step ol computation of operating capital impolyed

.

particulars Ant(z)
ESC ↑ 60 00, 000
,

RES 140 00,000

,

10 % Deb 400, 00,000

OCE 700 00 000
, ,
Step : 02 computation of overall costof Capital of UH

Ko =
WeXKe + Wax kd
CO
300L x0 14
HOLX
O D
.

=
.

= 0 .
06 + 0 04 .

= 0 .
110 %

Computation of operating profit (EBIT) of

Step : 03 .
UHd

f =T
EBT

11.5 = EBIT : EBT = EBIT I

-

EBT

15
:

= EBIT
EBIT-Int

1 5
.
= N
n =
HOL

1.54 - GOL = n

60L = 1 50
- -
x

= 60L = 120L = EBIT

0-5

Step:ou calculation of EVA o UHA

EVA = EBIT(1-T) -
(OCEXCOC)
= 120LX0 7 ·
-
(700LX10%]
= 84L -
TOL

L
 problem No : 35

Step: ol calculation of operating Capital Employedfor #Id.

particulars 2021 2022

Equity 390 472

Bank loan 110 160
S

OCE 500 632

Step : 02 Calculation of WACC o Hd

particulars 201 2022

WE 0 78 0 75

(
= . .

Wd
EE 0 22 0 25.
.
=

Ke 0 .

15 0 .

17

kd I (IoT) 9) /(0 65) = 0 058 10 %x0 65 = 0 065

. .
.

= = .

Ko= Wexk+ NdXKd 13 % 14 38 % .

Step : os computation of operating profit of Hid

BT 134 168

+ Int 8

EBIT 142L 180L

 EVA for H Hd
Step:on calculating .

EVA = EBIT (1-T) -

(KOXOCE)

EVA = 1420 65
. -
(0 ·

13 x500) = [Link]
2021

U =
180x0 65
·
-
(0 1438x632)
·
= 26 12L .

2022

problem No : 36
computation of valuesthefirm based on economic valueadded.
value of firm = + Investment on Assets
capital Employed + Return on Investment
=
prof CE + profI + prof yearly EVA .

particulars calculation puta 10% PV

capital employed 1000 I 100 C

Investment in Assets 50C 50C

= 100C (15% -
10 %) D
O :
1

Y, -
EVA = 5 C # 59
= 100 (15% -
10 % )
O'l

42 -
EVA = 5C 0 909
.

4 55C
.

43 EVA
-
= 5 0 826
.
4 /3
:

50 0 751 3 760
Y4 EVA
.

= :

0 683
45 EVA = 50 3 41C
.
= .

value of firm 170 85C .