Question

56. The capital structure of H Ltd. is as follows:
14% preference shares of 10 each
20,00,000
Equity shares of 10 each
32,00,000
Reserves and surplus
16,00,000
10% debentures
24,00,000
11% loan from banks/financial institutions
28,00,000
1,20,00,000
The average annual profit before payment of tax and interest is 24,00,000. The income tax rate is
assumed to be @ 40%.
Compute the value of equity shares of the company, if the applicable price-eaming ratio 9.​

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