From the following Balance Sheet of XYZ Ltd. as on 31st December, 2015, you are required to ascertain the fair value of the company’s shares showing in detail your calculation:The following information is given:
(a) The company’s prospect for 2016 are equally good.
(b) The market value of building is ₹ 1,00,000 and that of furniture is ₹ 6,000.
(c) Profits for the past three years have recorded an increase of ₹ 20,000 per annum.
(d) Companies of similar nature are showing a profit earning capacity of 10% on market value of shares.
(e) Investments earn interest at 5% per annum.

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I. EQUITY AND LIABILITIES (1) Shareholders' Funds: Balance Sheet of XYZ Ltd. as at 31st December, 2015 Particulars (1) (a) Share Capital -25,000 Equity Shares of * 10 each fully paid (b) Reserves and Surplus -- General Reserve Profit and Loss Account Balance on 1.1.2015 Profit for the year (2) Share Application Money Pending Allotment : 30,000 2,00,000 Note No. (2) Amount (₹) (3) 2,50,000 60,000 2,30,000