Example of earnings yield valuation, Finance Basics

Assignment Help:

Example of Earnings Yield Valuation

Estimated maintainable earnings are £240,000 per annum; rate of return required is 25 percent.

Calculate the value of the business.

Value MV) =       E/ EY x 100

                =       240,000/0.25 x 100

   M.V.      =       £960,000

This method can be transformed into the theoretical base, particularly if the business is going to relate.

PV = C/i (1-(1/ (1+0.25) N))                                          

Note as

Like N approaches ∞

PV = C/r

     = 240,000/ 0.25

     = £960,000


Related Discussions:- Example of earnings yield valuation

What would be the expected return of the portfolio, A Ltd.'s share gives a ...

A Ltd.'s share gives a return of 20% and B Ltd.'s share gives 32% return. Mr. Gotha invested 25% in A Ltd.'s share and 75% of B Ltd.'s shares. What would be the expected return of

Working capital, #question.component.of working capital

#question.component.of working capital

Working capital cycle, Working Capital Cycle The Concept of Working C...

Working Capital Cycle The Concept of Working Capital/Cash Operating Cycle Working capital cycle refers to period such elapses between the payment for raw materials bought

Acceptance rule of accounting rate of return or arr, Acceptance Rule of Acc...

Acceptance Rule of Accounting Rate of Return or ARR ARR procedure will accept those projects whose ARR is higher rather than that set with management or with bank rate and it

What are the advantages of placement, What are the Advantages of placement ...

What are the Advantages of placement Placement has the below benefits: (i) Timing of issue is significant for successful floatation of shares. In a depressed market cond

Working Capital, AsStudents will analyze and synthesize the financial repor...

AsStudents will analyze and synthesize the financial reports of an organization of their choice and present their findings in a PowerPoint presentation (with completed Notes sectio

Estate Planning, Paper on Estate Planning (3–5 pages) Evaluate the tools c...

Paper on Estate Planning (3–5 pages) Evaluate the tools commonly used in estate planning, including trusts, life insurance, and annuities. Compare the tools as to how they would a

Differences between debt and preference share capital, Differences between ...

Differences between Debt and Preference Share Capital Differences between Debt and Preference Share Capital are given below:   DEBT

Calculate the return on equity, Maghrabi Enclosure follows a moderate curre...

Maghrabi Enclosure follows a moderate current asset investment policy, but it is considering whether to shift to a different strategy.  The firm's annual sales are $500,000; its fi

Write Your Message!

Captcha
Free Assignment Quote

Assured A++ Grade

Get guaranteed satisfaction & time on delivery in every assignment order you paid with us! We ensure premium quality solution document along with free turntin report!

All rights reserved! Copyrights ©2019-2020 ExpertsMind IT Educational Pvt Ltd