Adentwi Enterprises Ltd bought a machine for GH₵ 150,000 on 1st January 2019. It depreciates the machine on cost over four years assuming a nil residual value. The company received a grant of GH₵30,000 from the municipal assembly to support the acquisition of the machines. Account for this grant under the netting off method.
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E. Adentwi Enterprises Ltd bought a machine for GH₵ 150,000 on 1st January 2019. It
The company received a grant of GH₵30,000 from the municipal assembly to support the acquisition of the machines.
Account for this grant under the netting off method.
Pleasant Place Plc is planning to obtain a stock market listing by offering 30% of its existing shares to the public. No new shares will be issued.
Its most recent summarized results are as follows;
Turnover GHC 120 m
Earnings GHC 1,500m
Number of shares in issue 6 million
The company is highly geared and has a dividend policy of 50% pay-out rate. And the retention
policy is expected to achieve 10% dividend growth each year.
Summarized details of two listed companies in the same industry as Pleasant Place are as
follows;
ICGC Ltd PCI ltd
Gearing (Total debt/ Equity) 45% 10%
Equity Beta 1.60 1.10
The current Treasury bill yield is 22% per annum. The average market return is estimated to be 27%.
The shares will be offered to the public at a price 20% lower than the estimated market valuation in order to increase the prospects of success for the public issue.
a. What will be the issue price?
b. Describe any three (3) suitable situations that may lead to the valuation of shares
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