Answer to Question #85377 in Finance for james

Question

ABC company is expected to generate post tax earnings of sh 200,000 p.a and
Companies in the same trade will generally have a price earning (P/E) ratio
Of 8. On account of company ABC limited size a ratio of 6 is considered more
Appropriate. The issued share capital is 1,000,000 ordinary shares of sh 50 each
Determine the value of shares and the value of business.