Question

QUESTION 2
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.

What will be the issue price?
Describe any three (3) suitable situations that may lead to the valuation of shares

KINDLY ANSWER ASAP
VERY URGENT

Answer 1

а a Q :- plea sent place is planning to obtain Stock market listing by offering 30% of existing ? 9 sol The company is highly glaced and has a devident polocy Equity befais levezed bela and this is used in cApm calculations. Equity beta of private companies is determined by comparing with a similar company in The same industry. pay rate & 50% / divid -end for the current pay you talking ke - RR + B (Rm-R6) ► 0.22+B(0.27 -0.22) B = 16 x 11-0.45)+1.1 11-0.10) lo 87 ke _ 0.22 t 1087 X.05 or' 31.35% = 0. 3135 price per share D(1 +9)/(ke-9) = 1500 x 50% (1+0,10)/10.3135 - 0.10) $ 3,864.17 issue price = market price 20076 li 3,864.17 x 0.80 3,091.344

Ý the situation of that may lead to validation of shares. (1) when private company wants to issue IPO to get listed on the stock exchange.it a praivate company wants to sell Chaves in the open market, an intial issue price must by valuiny. the current shave. (u) marges and Acquisition: if your growth stategy includes buying og mer ging with another compony, a Business valuation will help you determine if the price you are being asked to pay is a fire (en 2 Funding : when negotiating with the banks, verture capitalist or Othe prospective investors an objective valuation will help in raising Capital AN) TO Determine the Annel per share value of an employee stock ownership planlesop). in order to meet ERISA & IRS 'requriments , Shares of Emplayee stock ownership plans must be valued by an independent valuation Expert on an annual basis to establish a fair -stock price.