we have studied that EV can be calculated as follows: CE+ Extra value that is created i.e. MVA
as per this concept the ans should be 11.4 lacs but icai has solved this question in a different manner and arrived at a solution of 5.4 lacs
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The correct Enterprise Value for H K Ltd. based on the given information is 8,40,500.
But the answer in the material is 540000
we have studied that EV can be calculated as follows: CE+ Extra value that is created i.e. MVA , as per that concept ans should be 11.4 lacs
It seems there might be a specific definition or interpretation of Enterprise Value (EV) in the material you are referring to. If the material defines EV as the sum of Shareholders’ Funds (equity) and the Extra Value, where Extra Value is Market Value of Equity (MVE) minus Book Value of Equity (BVE) or some other adjustment, then we can try to reconcile the calculation.
This calculation still results in a negative value for EV, which seems unusual. Please review the material again and make sure there are no additional instructions, specific adjustments, or alternative definitions of EV that need to be considered.