QUESTION 1 Orange Plc is a large publicly quoted company listed on the Irish Stock Exchange. As part of a restructuring plan the directors of Orange have decided to sell one of its subsidiaries Cookie. Income Statement for the year ended 31 December 2020 The following additional information has been gathered concerning Cookie. 1. A firm of independent valuers has recently established the current realisable value of the business's assets as follows: 2. A similar business to Cookie is listed on the Irish Stock Exchange and has a price/earnings ratio of 11 . 3. The profit for the year for Cookie for the forthcoming year is expected to be the same as for the year 31 Dec 2020 . The dividend payout ratio is expected to be 40% and dividends are expected to grow at 4% for the foreseeable future. 4. The business has an estimated cost of ordinary shares (equity) of 10% REQUIRED: (a) Prepare valuations per share for Cookie using the following valuation methods: (i) Net assets valuation approach (4 marks) (ii) The net realisable value approach (4 marks) (iii) P/E Basis (4 marks) (iv) Dividend growth basis (4 marks) (b) When deciding on a valuation method the purpose for which the shares are being valued should be considered. Appraise of appropriate valuation methods for different circumstances. (9 marks) QUESTION 1 Orange Plc is a large publicly quoted company listed on the Irish Stock Exchange. As part of a restructuring plan the directors of Orange have decided to sell one of its subsidiaries Cookie. Income Statement for the year ended 31 December 2020 The following additional information has been gathered concerning Cookie. 1. A firm of independent valuers has recently established the current realisable value of the business's assets as follows: 2. A similar business to Cookie is listed on the Irish Stock Exchange and has a price/earnings ratio of 11 . 3. The profit for the year for Cookie for the forthcoming year is expected to be the same as for the year 31 Dec 2020 . The dividend payout ratio is expected to be 40% and dividends are expected to grow at 4% for the foreseeable future. 4. The business has an estimated cost of ordinary shares (equity) of 10% REQUIRED: (a) Prepare valuations per share for Cookie using the following valuation methods: (i) Net assets valuation approach (4 marks) (ii) The net realisable value approach (4 marks) (iii) P/E Basis (4 marks) (iv) Dividend growth basis (4 marks) (b) When deciding on a valuation method the purpose for which the shares are being valued should be considered. Appraise of appropriate valuation methods for different circumstances. (9 marks)