PR Industries plc, a major listed conglomerate, is considering acquiring an interest in Howard Pope Ltd, an unlisted business that has been trading for about 40 years as a manufacturer of domestic appliances.

The latest available summarised accounts of Howard Pope Ltd are as follows:

In recent years the directors of Howard Pope Ltd have adopted a policy of increasing dividends by approximately 10 per cent each year.
The cost of equity of listed businesses in the same industry as Howard Pope Ltd, which are similarly capital geared, is estimated at 13 per cent. The average price/earnings ratio of such businesses is 15.0.
The directors of PR Industries plc have not yet decided what proportion of the share capital of Howard Pope Ltd they wish their business to acquire, and you have been asked to consider the possibility of acquiring either a minority or a majority stake.
Estimate the value of a share in Howard Pope Ltd. Would your view be different according to whether PR Industries plc was acquiring a controlling or a minority interest?

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Profit and loss account for the year ended 31 December last year Profit on ordinary activities after tax Dividends Profit retained Balance sheet as at 31 December last year Non-current assets Net current assets Issued share capital (ordinary shares of 5p) Share premium account Revenue reserves Floating rate term loan m 15.30 (5.00) 10.30 m 50.67 92.75 143.42 2.00 6.00 105.42 30.00 143.42