QUESTION 3 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.
QUESTION 3 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.
PFIN (with PFIN Online, 1 term (6 months) Printed Access Card) (New, Engaging Titles from 4LTR Press)
6th Edition
ISBN:9781337117005
Author:Randall Billingsley, Lawrence J. Gitman, Michael D. Joehnk
Publisher:Randall Billingsley, Lawrence J. Gitman, Michael D. Joehnk
Chapter12: Investing In Stocks And Bonds
Section: Chapter Questions
Problem 4FPE
Related questions
Question
a. What will be the issue price?
b. Describe any three (3) suitable situations that may lead to the valuation of shares
Transcribed Image Text:QUESTION 3
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.
4
Summarized details of two listed companies in the same industry as Pleasant Place are as
follows;
ICGC Ltd
PCI Itd
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.
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