Homework answers / question archive / In an IPO, the investment banker decides to use a novel pricing methodology based on the following: (1) the valuation based on the present value of the future cash flow from long term supply contracts will be given 30% weight age, (2) the cost-saving from renewable energy usage will be given 20% weight age, (3) gains from for ex options in the money will be given 20% weight age and (4) super profits  arising from brands will be given 30% weight age

In an IPO, the investment banker decides to use a novel pricing methodology based on the following: (1) the valuation based on the present value of the future cash flow from long term supply contracts will be given 30% weight age, (2) the cost-saving from renewable energy usage will be given 20% weight age, (3) gains from for ex options in the money will be given 20% weight age and (4) super profits  arising from brands will be given 30% weight age

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In an IPO, the investment banker decides to use a novel pricing methodology based on the following:

(1) the valuation based on the present value of the future cash flow from long term supply contracts will be given 30% weight age, (2) the cost-saving from renewable energy usage will be given 20% weight age, (3) gains from for ex options in the money will be given 20% weight age and (4) super profits  arising from brands will be given 30% weight age. The price per share based on normal pricing methodology works out to Rs.125 per share. The novel pricing results in a pricing of Rs.176 per share. Fair value based on equal application of both the methods results in a valuation of`.150 per share. Peer valuation in the market is at Rs.190 per share. The applicable price for the IPO is:

(a) Rs 125 per share                (b) Rs 176 per share

(c) Rs 150 per share               (d) Rs 190 per share

(e) Any of the above               (f) None of the above