It is given that net assets available to equity shareholders amount to Rs. 90,000/-. The share capital is consisting of 10,000 equity shares of Rs. 5 each on which Rs. 2 per share are paid. The intrinsic value per equity share is

The correct answer is - Rs. 9

Key Points

• Intrinsic Value Calculation
  • The intrinsic value per equity share can be calculated using the formula: Intrinsic Value = Net Assets Available to Equity Shareholders / Number of Equity Shares.
  • Given:
    • Net assets available to equity shareholders = Rs. 90,000
    • Number of equity shares = 10,000
  • Therefore, Intrinsic Value per equity share = Rs. 90,000 / 10,000 = Rs. 9

Additional Information

• Share Capital Details
  • The share capital consists of 10,000 equity shares of Rs. 5 each.
  • Only Rs. 2 per share is paid up, so the paid-up share capital is 10,000 shares * Rs. 2 = Rs. 20,000.
• Net Assets Available to Equity Shareholders
  • This is the total assets available to the shareholders after all liabilities have been paid.
  • In this case, it amounts to Rs. 90,000.
• Intrinsic Value
  • The intrinsic value represents the real worth of an equity share based on the net assets available.
  • It is a crucial metric used by investors to assess whether a stock is undervalued or overvalued.