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Increase the value of Shareholders - With Profit Business

T

Tha73

Member
Hi,

In the Q & A - Question 4.7 - part (iv) asks to give options to increase the value of shareholders. The answer gives an option as " strengthen the published valuation basis"

Could someone please explain the below paragraph under the above heading?

" If you published using, for example a lower interest rate, the same bonus declarations will appear more valuable. This will increase the value of a specified bonus declaration to shareholders"

Thank you
 
In the Q & A - Question 4.7 - part (iv) asks to give options to increase the value of shareholders. The answer gives an option as " strengthen the published valuation basis"

Could someone please explain the below paragraph under the above heading?

" If you published using, for example a lower interest rate, the same bonus declarations will appear more valuable. This will increase the value of a specified bonus declaration to shareholders"
Click to expand...

In a 90:10 fund the shareholder transfer is one ninth of the cost of bonus. This cost is calculated using the valuation interest rate. So if you reduce the valuation interest, the cost of bonus goes up and so does the shareholder transfer.

Best wishes

Mark
 
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