From the following particulars calculate the value of share of Z Ltd. on yield basis:

Balance Sheet of Z Ltd. as on 31st March, 2011

Liabilities

Rs

Assets

Rs

 80,000 equity shares  

 

Land and buildings

5,00,000

 of `Rs.10 each  

8,00,000

Plant and machinery

6,00,000

 4,000 9% preference  

 

Patents

2,00,000

shares of `Rs.100 each

4,00,000

 Sundry debtors  

3,00,000

10% Debentures

2,00,000

 Work in progress  

 

Reserves

4,00,000

 and stock  

5,00,000

Sundry creditors

4,00,000

 Cash at bank  

1,00,000

 

22,00,000

 

22,00,000

Land and buildings to be valued at 9,00,000. The company’s earnings were as follows:

Year ended 31st March

Profits before tax Rs

Tax paid Rs

2007

3,00,000

80,000

2008

4,00,000

1,60,000

2009

1,00,000

40,000 (Strike) .

2010

5,00,000

2,30,000

2011

5,50,000

3,00,000

The company paid managerial remuneration of Rs.60,000 per annum but it will become Rs.1,00,000 in future. There has been no change in capital employed. The company paid dividend of 90 paise per share and it will maintain the same in future. The company proposes to build up a plant rehabilitation reserve. Dividend rate in this type of company is fluctuating and the asset backing of an equity share is about 1 1/2 times. The equity shares with an average dividend of 8% sell at par. (Tax rate is assumed to be 40%).