Corporate Finance Analysis Assignment Report

Running head: REPORT 0
CORPORATE FINANCE
DECEMBER 26, 2019
STUDENT DETAILS:

REPORT 1
Answer 1:
A (i) Calculation of intrinsic value of shares by price earning approach
Particulars 2013
20
14 2015 2016
Diluted EPS
(cent) 0.5 0.6 0.4 0.52
market price per
share 10
13.
2 9 10
P/E ratio 20 22 22.50 19.23
PE Multiple Model
Industry PE ratio 20.93
EPS 0.0536
Intrinsic Value 1.12
a. (ii) Calculation of intrinsic value of shares by dividend discount model-
Dividend Discount Model
Dividend expected 0.08
Growth rate 9.00%
discount rate 9.90%

REPORT 2
Intrinsic Value 8.66
a. (iii) Calculation of intrinsic value of shares by net realisable value approach-
Particulars Amount
Cash 1
PPE 12
Inventory 1.4
Account
receivables 0.7
Others 0.7
Total realizable
value 15.8
Bonds 5
Net asset value 10.8
Total shares 1
intrinsic value 10.8
(b) The directors of Hellcat want to choose Net realisable value method. There are certain
advantages as well as advantages of the net realisable value method (Green, Hand and Zhang,
2016). The Net realizable value model (NRV model) is the reasonable estimation of the fair
value for the reason that this is the tremendous estimation of both the benefit as well as cost of