Answered: current assets is estimated at £45m.…

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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Question

Waldo Lt Balance sheet

	£m	£m
Non Current Assets		180
Current Assets	75

Current Liabilities	(25)	50
		230
Financed by:
Ordinary Shares (25p)		138
Reserves		32
8% Loan notes		60
		230

The realisable value of the fixed assets is estimated at £135m and the realisable value of current assets is estimated at £45m. Recent profit after tax is £37m and a sector P/E ratio is 12.

Using the information above, calculate the firm value per share using the realisable value method for the shares in Waldo Ltd.

Group of answer choices

£0.70 or 70p per share

£0.14 or 14p per share

£0.17 or 17p

£0.31 or 31p per share

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