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

Risk adjusted discounting rate – methods of computing cost, Risk Adjusted D...

Risk Adjusted Discounting Rate - Methods of Computing Cost of Capital This method is used to establish the discounting rate to be used for a provided project. The cost of capi

Monitoring costs - agency costs, Monitoring Costs - Agency Costs This ...

Monitoring Costs - Agency Costs This is incurred to prevent undesirable managerial actions. They are meant to ensure that both parties live to the spirit of agency contract. T

Example of asset based valuation, Example of Asset Based Valuation Ext...

Example of Asset Based Valuation Extracted information from the books of Kent Limited.   Current liabilities Bank overdraft    Sh. 300,000

In 1899, If the winner’s prize increases at the same rate (8.43%), what wil...

If the winner’s prize increases at the same rate (8.43%), what will it be in 2041?

Dividend cover ratio, Dividend Cover Ratio Dividend cover = EPS/ DPS =...

Dividend Cover Ratio Dividend cover = EPS/ DPS = Earning to ordinary shares/Dividend paid       This signifies the number of times dividend can be paid from earnin

Calculate holding period return, 1)       What is the holding period re...

1)       What is the holding period return to an investor who bought 100 shares of Charter Oil nine months ago for $36 a share, received two $50 dividend checks, and sold the s

Dow Theory, Dow theory elliot wave theory

Dow theory elliot wave theory

What are the tasks of a financial system, What are the tasks of a financial...

What are the tasks of a financial system? Three Tasks of a Financial System are as follows: 1. Decreasing transaction costs 2. Decreasing financial risk 3. Giving liqu

Draw a budget constraint , The price of bread is $0.50 per pound, and the p...

The price of bread is $0.50 per pound, and the price of butter is $0.25 per ounce. Channing spends all of her income, buying 12 pounds of bread, 7 ounces of butter, and nothing els

Accept or reject rule of npv, Accept or Reject Rule of NPV Under this ...

Accept or Reject Rule of NPV Under this method, a company should accept an investment venture if N.P.V. is positive that is if present value of cash outflows exceeds such of c

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