With the above information and following assumption you are required to compute (b) Market Value Added (MVA) Assuming that: (i) WACC is 12%. (ii)…

CA Final · Advanced Financial Management · RTP · May 2026
With the above information and following assumption you are required to compute (b) Market Value Added (MVA) Assuming that: (i) WACC is 12%. (ii) The share of company currently is quoted at $ 50 each.

Suggested Answer and Working Notes:

Determination of Market Value Added (MVA) $ Million Market value of Equity Stock [W. No. 2] 500 Equity Fund [W. No. 3] 425 Market Value Added 75 Working Notes: (2) Market Price per equity share (A) No. of equity share outstanding (B) 10 Million Market value of equity stock (A) x (B) $ 500 Million (3) Equity Fund Equity Stock $ 100 Million Reserves & Surplus $ 325 Million $ 425 Million

Topics: Business Valuation

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