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Explain two potential issues with using the above approaches

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Question - Sagoo Company (SC) has been in operation since 1952. SC has excess cash and is in the process of determining the best possible investment. SC's accountant has been asked to present three investments for review and has found the following:

Institution Net assets (book value) Net assets (liquidation value) # of shares outstanding

GSX Corp. $1,800,000 $1,750,000 300,000

Laxer Inc. $1,210,000 $1,150,000 650,000

Wilter Ltd. $ 675,000 $ 550,000 525,000

Required -

a) Determine the estimated value per share using the liquidation approach.

b) Determine the estimated value per share using the net book value approach.

c) Explain two potential issues with using the above approaches.

Reference no: EM133175307

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