The Balance Sheet as on 31st March, 2010 showed the following
position :
Liabilities Rs. Assets Rs.
Share Capital : Debtors 5,00,000
20,000 Equity Shares
of Rs.100 each 20,00,000 Stock in Hand 15,00,000
General Reserve 6,00,000 Plant 10,00,000
Profit and Loss
Account 3,50,000 Factory Premises 11,50,000
Current Liabilities :
Bank Overdraft 3,00,000
Creditors 4,00,000
Provision for Taxation 5,00,000
41,50,000 41,50,000
Additional Information:
(1) Net Profits of the company for the last five years before providing
for taxation were as follows : Rs. 4,10,000; Rs. 6,40,000;
Rs. 7,00,000; Rs. 8,50,000; Rs. 9,00,000.
(2) Managerial Remuneration of Rs. 60,000 has been charged for
each year.
(3) The market value of the assets were as follows :
Stock - Rs. 15,50,000; Plant - Rs. 10,40,000; Factory Premises -
Rs. 12,83,000.
(4) Taxation may be considered at 50%.
(5) Goodwill should be valued at 5 years purchase of super profits.
(6) Normal Rate of Return - 10% p.a.
On the basis of the above information, find out Intrinsic Value
of Shares. Indicate Assumptions, if any, clearly.
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