VALUATION EXERCISES

(REAL ESTATES & ENTERPRISES)

Problem 1
A land that needs to be appraised is residential land that does not have valid documents on
land use rights but has been confirmed by the local government that its use is in accordance with
the planning, has no disputes, and has an area of 100m2. The transfer price for land with full legal
documents in a similar location is 30 million VND/m2. The land price according to regulations of
the local People's Committee is 20 million VND/m2. The maximum limit of residential land in
case of land allocation according to the local People's Committee is 150m2.
According to current regulations, when applying for a land use right certificate, the owner
must pay 50% of the land use fee calculated at the price prescribed by the State. Registration fee
is 0.5%. Fee for appraisal and issuance of land use rights is 3 million VND. Cadastral fee is 50
thousand VND.
Requirement: Using the direct comparison method, determine the value of the above plot of land.

Problem 2
A plot of land that needs to be appraised has an area of 500m 2 without a land use right
certificate, has no disputes, and the current land use is residential land.
The transfer price for residential land with complete legal documents in a similar location
is 75 million VND/m 2 .
The land price according to the regulations of the local People's Committee is 50 million
VND/m2, the residential land limit in this area is 150m2.
When applying for a land use right certificate, land users are exempt from paying land use
fees for areas within the limit and must pay 100% of the land price prescribed by the State for
areas exceeding the limit. Registration fee is 0.5%. Fee for appraisal and issuance of land use rights
is 3 million VND. Cadastral fee is 50 thousand VND.
Requirement: Using the direct comparison method, determine the value of the above plot of land.
Problem 3
There are two plots of land A and B with the following data:
- The area of both plots of land is equal to 300m2. Lot A has a frontage width of 5m and a
depth of 60m. Lot B has a frontage width of 15m and a depth of 20m.
- The actual transfer price of land on the road in this area for plots of land with frontage
width of 5m and an area of 100m2 (5m x 20m) is 50 million VND/m2; for plots of land without
frontage it is 38 million VND/m2.

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 A

60m

5m 20m

15m

Requirement: Using the direct comparison method, estimate the value of plots A and B?
Knowning that: The goal of this valuation is to make a decision to open a mini supermarket.
Problem 4
At a road there is the following information:
- Villa X is built on a land area of 500m2, legal in terms of real estate rights.
- Villa A is located next to Villa X, identical to Villa X in many aspects, and has just been
sold by the court for 4,000 million VND.
- Villa B is similar to Villa X but has an additional garden which is worth 800 million
VND, has legal real estate rights, and has just been sold with the following conditions: payment in
5 installments, each installment 1 year apart. Of which, the first payment upon handover is 2,500
million VND, the 2nd installment is 1,050 million VND, the 3rd installment is 980 million VND,
the 4th installment is 888 million VND, and the final installment is 500 million VND.
- Villa C has the same area and location as Villa X, but the interior is less expensive
(assessed) at 200 million VND, has no valid documents on land use rights, no disputes, has just
been renovated. It has been sold for 3,600 million VND.
- Under the current regulations:
(i) The land price range prescribed by the State on this road is 10 million VND/m2.
(ii) Land use limit according to planning is 200 m2.
(iii) Land use fees when issuing land use rights certificates are calculated at 50% of the
land price prescribed by the State for land areas within the limit and 100% for land areas exceeding
the limit.
Requirement: Based on the above data, use the direct comparison method to estimate the value of
villa X?
Knowing that: other factors affecting real estate value are considered similar. The discount
rate is 12%/year.

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Problem 5
A property is purchased for $6,000,000, the amount of $200,000 is immediately spent on
road construction and other development costs. For the next 3 years, this real estate did not bring
in any income.
Using the investment method, what is the total cost of this property at the end of year 3 for
the buyer? Assume that the rate of return required by the buyer is 15%/year.

Problem 6
A timber tree plantation reaches maturity in 50 years. The initial cost for planting is 3,000
USD/ha. Estimated annual care costs are 200 USD/ha.
1. Estimate the transfer price of a 15-year-old forest with an area of 6 hectares?
2. Estimate the value of a forest that can be exploited with an area of 10 hectares?
Knowing that: the required rate of return on investment capital is 18%/year, planting costs
are incurred at the beginning of the first year, care costs are settled at the end of each year.

Problem 7
The rental price for a real estate property is 40,000 USD/year, payable at the end of each
year for a period of 30 years. The agreement signed in the contract is: after 2 years the lessor must
spend money to rebuild the stairs at a cost of 10,000 USD, after 5 years he must repair the air
conditioning system at the cost of 20,000 USD, and after 8 years must rebuild the boundary wall
at an estimated cost of $5,000.
1. Estimate the value of real estate lease rights, assuming that normally the lessor is always
able to generate a return on investment of 13%/year?
2. It is estimated that after 8 years the owner can sell the real estate for 350,000 USD.
Estimate the value of permanent ownership of this real estate, assuming that 13%/year is the
average rate of return on the capital market?

Problem 8
A real estate is an old house that is currently in disrepair, with a land area of 60m2 and a
construction area of 150m2.
There is market evidence of the sale of a similar vacant land for 20,000,000 VND/m 2 . The
cost of replacing a new house calculated according to the current price level is estimated at
2,500,000 VND/m 2 of construction.
Requirement: Using the discounted cost method, estimate the value of the above real estate.
Knowing that the economic life of the house is 60 years, the remaining economic life is 20
years.

Problem 9
1. There is information about real estate A as follows:
- Land area 300 m2, with full legal land use rights.
- Construction on land: 2-storey house, reinforced concrete structure, construction floor area
120 m2.
- Depreciation of main structures: foundation 32%, walls 44%, floors 36%, roof 44%.
2. Related information:
- A similar empty plot of land which has an area of 250m2, without valid documents on land
use rights, no disputes, and stable use has just been sold for 2,250 million VND. According
to current regulations, to be granted a land use right certificate, users must pay a land use
fee equal to 100% of the land price prescribed by the State for the entire area.
- The State's regulated land price in the same location is 12 million VND/m2.
- Proportion of the value of main structures in the total value of the construction: foundation
8%, walls 18%, floor 16%, roof 14%.

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 - The unit price for new construction of a house with a similar structure is 2.5 million
VND/m2.
- The cost to fix the outdated kitchen situation is 13 million VND.
Requirement: Using the discounted cost method, estimate the value of real estate A.

Problem 10
There are documents about an empty land as follows:
- Area 1 hectare (10,000m2). The price for transferring land use rights after completing the
investment in technical infrastructure in this area for land plots under 100m2 is about 10
million VND/m2.
- According to local government regulations: the percentage of land allowed for construction
is 60% of the land area.
- The investor plans to divide the land into 60 lots for sale. The average investment cost for
technical infrastructure on the land is about 2 million/m2. Income tax investors must pay is
300 million VND, expected profit is about 2,000 million VND.
Requirement: Using the surplus method, how much the investor can buy the vacant land for?

Problem 11
The real estate that needs to be appraised is a factory area with a land area of 10,000 m2, the
remaining factory quality is estimated at 15%. Calculate the market value of this property,
knowning that:
- The unit price for building a new factory with a similar structure to the existing factory on the lot
is 2 million VND/m2.
- This area cannot continue production but must be converted into a residential area.
- The optimal use purpose is determined to invest in building townhouses for sale with a land area
of 120m2/unit, construction area of 200m2/unit.
- The prescribed land use rate is 60%.
- Residential land price according to current State regulations is 20 million VND/m2
- Average infrastructure investment cost is 1.5 million VND/m2.
- The cost of building a new house is 4.5 million VND/m2.
- Planning cost is 100 million VND.
- Selling costs (including costs for advertising, marketing, selling and distributing townhouses):
500 million VND
- The cost of demolishing the old factory is 200 million VND
- The expected selling price of a house is 5,000 million VND/house
- Profit for development investors is expected to be 10%/revenue.
- All investment costs must be borrowed from the bank with an interest rate of 0.5%/month, loan
term is 1 year.
According to current regulations, when applying for a land use right certificate, the user must pay
100% of the land use fee calculated at the price prescribed by the State.

Problem 12
ABC Joint Stock Company has issued 100,000 shares. The market price is 120,000 VND/share.
Profit after tax reserved for paying dividends to shareholders in the last 5 years is as follows:
N–4 N–3 N–2 N–1 N
520 530 540 550 560
In the coming years, it is expected that dividend payments will increase by 2%/year, the average
return rate of investment capital in the market is determined to be 10%/year. From the perspective

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of minority investors, estimate the real value of ABC Joint Stock Company and comment on the
price of ABC Company's shares on the market knowing that each share corresponds to one share.
Mr. D and Ms. E are considering investing in ABC company. Mr. D's minimum required rate of
return is 8% and Ms. E's is 12%. Give your opinion when the company's share price drops to
60,000 VND/share.

Problem 13
ABC Joint Stock Company is circulating 100,000 shares, the current share price on the
market is 120,000 VND/share. Profit after tax for dividends to shareholders in year N is 1,080
million VND.
According to the company's development plan, in the coming years, dividend payments to
shareholders will increase at a rate of 2%/year. The average rate of return on investment capital in
the market is determined to be 10%/year.
1. From the perspective of a minority investor, estimate the real value of ABC stock and
comment on the stock price currently trading on the market?
2. Mr. John and Ms. Rosie are considering investment opportunities in ABC company. Mr.
John's minimum required rate of return is 8%, Ms. Rosie's is 12%. What is the decision when ABC
stock price dropped to 68,850 VND/share and 60,000 VND/share?

Problem 14
Business A purchased business management software specifically designed for business A
by IT company IVS in June/N. In June/N+2, enterprise A used business management
software developed by IVS which is operating very successfully at enterprise A as capital
contribution to establish enterprise C with a similar type of business to that of business A.
Appraisal company X was hired to calculate the value of this business management
software.
Because this software is relatively unique compared to other business management
software traded on the market, appraisal company X decided to use the cost method.
The valuation of business management software A is carried out according to the
cost method with the cost of year N+2 as follows:
* Determine the cost of building and maintaining business management software A:
- Copyright costs for software design tools: 300,000,000 VND.
- Software customization costs (labor costs, hiring consultants, etc. to develop software and
complete testing of business management software A): 600,000,000 VND.
- Implementation costs (training for customers, ...): 250,000,000 VND.
- Other costs (management costs, warranty costs, backup costs,...): 140,000,000 VND.
- Expected profit of software development unit: 18%.
Assumptions:
+ There is no wear and tear or obsolescence of functions because data and management
documents are always updated regularly, meeting the functions of enterprise A's
management at the present time.

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+ There is no wear and tear or technological obsolescence because the software solutions
being used are still the latest and commonly used.
+ Economic wear and tear and obsolescence are negligible.

Problem 15
Valuation company A evaluates the intellectual property rights of a type of
packaging that has a unique, popular design which has been registered for intellectual
property rights of Vina Paper Napkin Paper Manufacturing Company.
Based on the analysis of collected information, Valuation Company A makes the
following comments:
- The expected economic life of the packaging is 06 years, starting from year N;
- Using new packaging increases Vina Paper's profits by 25% compared to when
new packaging was not used.
- The discount rate is 12% calculated on the basis of adding the average profit
margin of the industry (tissue paper production) is 11%/year and the risk surcharge for
generating profits from intellectual property rights for new packaging design is 1%.
Profit after tax in case of not using new packaging in year N of Vina Paper company
is 300 million VND. In the following years, profits are expected to grow by an average of
150 million VND.
Requirement: Using the excess profits method, value the intellectual property rights
mentioned above.

Problem 16
Enterprise X is a state-owned enterprise undergoing equitization with the following
documents:
Shortened balance sheet of enterprise X on 31/12/N.
Unit: 1,000,000 VND.
Asset Amount Capital Amount
of money of money
A. Current assets. 850 A. Liabilities. 1200
1. Money 130 1. Short-term loan. 500
2. Short-term securities. 120 2. Other payables 150
3. Accounts receivable. 220
4. Inventory. 300 3. Long-term loan. 550
5. Other short-term assets 80
B. Fixed assets and long-term investments. 2700 B. Owner's equity. 2350
1. Residual value of tangible fixed assets. 1580 1. Business capital. 1500
2. Financial leased fixed assets. 200 2. Enterprise funds 454
3. Investment in securities in company B: 3. Undistributed profits. 396
(2,200 shares). 440
4. Contribute capital to joint ventures. 300
5. Fixed assets for lease. 180
Total assets 3550 Total capital 3550

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The reassessment of all assets of the enterprise shows the following changes:
1- Some bad receivables worth VND 120 million. A debt trading company said they are willing to
buy back this debt for 50% of the credit value.
2- Poor quality inventory that does not meet production and business requirements has a reduced
value according to accounting books of 30 million VND.
3- Tangible fixed assets are re-evaluated according to the market price. Their value increases by
150 million VND.
4- Enterprise X also has to pay rent for fixed assets for 10 years at the rate of 20 million VND per
year. If one wants to rent a fixed asset with similar conditions at the current time, he usually have
to pay 25 million VND per year.
5- The stock price of company B at the stock exchange at the time of evaluation is 205,000
VND/share.
6- The capital contribution to the joint venture was re-evaluated to increase by 70 million VND.
7- According to the property lease contract, the lessee must pay in installments over 20 years, each
year paying an equal amount of 15 million VND.
Requirement: Using the net asset value method, estimate the value of business X?
Know that: Discount rate is 10%/year.

Problem 17
Enterprise X is a state-owned enterprise undergoing equitization with the following documents:
Shortened balance sheet of enterprise X on 31/12/N.
Unit: 1,000,000 VND.
Asset Amount Capital Amount
of money of money
A. Current assets 950 A. Liabilities 1300
1. Money 260 1. Short-term loan 600
2. Accounts receivable 210 2. Other payables 150
3. Inventory 400
4. Other short-term assets 80 3. Long-term loan 550
B. Fixed assets and long-term investments 2800
1. Residual value of tangible fixed assets 1250 B. Owner's equity 2450
2. Financial leased fixed assets 200 1. Business capital 1500
3. Investment in securities of company B: 2. Enterprise funds 554
(70,000 shares) 1050 3. Undistributed profits 396
4. Contribute capital to joint ventures 300

Total assets 3750 Total capital 3750

The reassessment of all assets of the enterprise shows the following changes:
1- Some receivables that cannot be collected are 70 million VND.
2- Poor quality inventory that does not meet production and business requirements has a reduced
value according to accounting books of 80 million VND.
3- Tangible fixed assets that are re-evaluated according to the market price has an increase in value
of 50 million VND.
4- Enterprise X also has to pay rent for fixed assets for 10 years, 20 million VND per year. If one
wants to rent a fixed asset with similar conditions at the current time, he usually have to pay 25
million VND per year.
5- The stock price of company B at the stock exchange at the time of evaluation is 35,000
VND/share.
6- The capital contribution to the joint venture was re-evaluated to increase by 70 million VND.

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Requirement: Using the net asset value method, estimate the value of business X, knowing that:
Discount rate is 15%/year.

Problem 18
Enterprise X is a state-owned enterprise undergoing equitization with the following documents:
Shortened balance sheet of enterprise X on 31/12/N.
Unit: 1,000,000 VND.
Asset Amount Capital Amount
of money of money
A. Short-term assets 500 A. Liabilities 600
1. Money 30 1. Short-term loan 160
2. Short-term securities 120 2. Other payables 40
3. Accounts receivable 100
4. Inventory 250 3. Long-term loan 400

B. Fixed assets and long-term investments 1500 B. Owner's equity 1400

1. Residual value of tangible fixed assets 500 1. Business capital 1250
2. Financial leased fixed assets 200
3. Invest in securities in company B: (2,200 2. Undistributed profits 150
shares) 220
4. Contribute capital to joint ventures 400
5. Fixed assets for lease 180
Total assets 2000 Total capital 2000
The reassessment of all assets of the enterprise shows the following changes:
1- Some uncollectible receivables are 40 million VND. The remaining amount is classified as
uncollectible. The debt trading company said they are willing to buy back this amount for an
amount equal to 30% of the value of the credit.
2- Poor quality inventory that does not meet production and business requirements according to
re-evaluation results has a reduced value of 30 million VND.
3- Tangible fixed assets are re-evaluated according to the increased market price of 150 million
VND.
4- Enterprise X also has to pay rent for fixed assets for 10 years, 20 million VND per year. If you
want to rent a fixed asset with similar conditions at the current time, you usually have to pay 25
million VND per year.
5- The stock price of company B at the stock exchange at the time of evaluation is 105,000
VND/share.
6- The capital contribution to the joint venture was re-evaluated to increase by 20 million VND.
7- According to the property lease contract, the lessee must pay in installments over 20 years, each
year paying an equal amount of 10 million VND.
Requirement: Using the net asset value method, estimate the value of business X, knowing that:
Discount rate is 10%/year.

Problem 19
Determine the value of business A based on the following documents:
1. Extract from the balance sheet on December 31, N:
- Net working assets value is: 3,500 million VND
- Original price of fixed assets is: 12,000 million VND
2. Extract from the business results report of year N:
- Profit before tax: 1,100 million VND
- Corporate income tax rate is 25%
3. The annual depreciation amount is 1,200 million VND. Profit after corporate income tax
increased by an average of 2%/year.

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4. The enterprise will continue to operate for another 7 years.
5. It is estimated that after the enterprise terminates operations, the liquidation value of fixed assets
that can be recovered is equal to 4% of the original price, the value of net working assets can be
recovered in full once when the project ends.
6. The average return rate of capital on the market is 10%/year.

Problem 20
There is a document about business Y as follows:
1. Extract from business results report for the most recent 2 years
Unit: million VND
TARGETS Year N-1 Year N
1. Net revenue 61420 62170
2. Cost of goods sold 57960 58650
3. Gross profit from sales and service provision 3460 3520
4. Financial revenue 1500 1200
5. Financial costs (loan interest) 1200 1200
6. Sales costs, business management costs 3120 3150
7. Net profit of business activities 640 370
8. Other operating profits 60 30
9. Total profit before tax 700 400
10. Corporate income tax 196 112
11. Profit after tax 504 288

2. Additional information
- Income from other activities is unusual beyond the business's ability to predict.
- Enterprises depreciate using the straight-line method, with a regular annual depreciation
rate of VND 500 million.
- According to economic experts, the weight of profitability of years N and N-1 compared
to the future is 2 and 1 respectively.
- The average cost of capital in the market is 12%/year.
Requirement: From the above data, estimate the value of business Y according to the method of
present net profit .

Problem 21
ABC is a highly reputable joint stock company, ABC shares are listed on the centralized
stock market.
Excerpt from the business results report dated December 31, N as follows:
Unit: 1 million VND

TARGETS Year N
1. Net revenue 12,474
2. Cost of goods sold 9.208
3. Gross profit from sales and service provision 3,266
4. Financial revenue 120
5. Financial costs (loan interest) 256
6. Sales costs, business management costs 1,399
7. Net profit of business activities 1,731
8. Other operating profits 50
9. Total profit before tax 1,781

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 10. Corporate income tax 445.25
11. Profit after tax 1,335.75
12. Dividends 600
13. Retained profits 735.75
14. Income per share 0.006

Assuming the stock market operates stably, the State can control speculative factors. The average
opportunity cost of capital in the market is 12%/year. ABC Company issues only common shares
and no preferred shares.
Estimate the value of ABC joint stock company in 2 cases:
1. ABC company pursues a policy of paying constant dividends.
2. ABC company commits to paying dividends increasing steadily at 2%/year.

Problem 22 Alpha is a one-member LLC owned by the State and is in the process of
converting into a joint stock company, with the following documents:
a. Extract data from the balance sheet on December 31, 2020 Unit: 1,000,000 VND
Asset 1/1/N 31/12/N Capital 1/1/N 31/12/N
A. Current assets 680 750 A. Liabilities 920 930
1. Capital in money 70 60 1. Short-term debt 230 220
2. Short-term investment 20 30 2. Long-term debt 690 710
3. Short-term receivables 160 180 B. Equity 810 850
4. Inventory 420 460 1. Owner's 650 650
5. Other short-term assets ten 20 investment capital
B. Long-term assets 1,050 1,030 2. Funds 120 130
1. Residual value of fixed 900 860 3. Undistributed 40 70
assets after-tax profits
2. Long-term financial 80 90 4. Other sources of - -
investment funding and funds
3. Construction in progress 70 80
costs
4. Long-term margin and - -
deposit
Total 1730 1780 Total 1730 1780
b. Original price and accumulated depreciation of each group of fixed assets as of
31/12/N:
Fixed assets group Original price Accumulated depreciation
1. Houses and architectural 1000 500
objects
2. Machinery and 680 450
equipment

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 3. Means of transport 250 180
4. Management tools 150 50
5.Other fixed assets 60 30
Total 2,140 1,210
c. According to the document guiding inventory and re-evaluation of fixed assets dated
31/12/N:
- The revaluation coefficient of fixed assets: Houses and architectural objects is
0.70; Machinery and equipment is 0.7; Means of transport is 0.6; Management instrument
is 0.8; Other fixed assets are 0.7.
- The residual value coefficient for inventory is 0.75.
- Other assets and liabilities remain unchanged.
d. Statistics on business capital and profit after tax in recent years (million VND)
Year N–3 N–2 N–1 N
Targets
1. Profit after tax 100 105 118 122
2. Average business capital 1,620 1,690 1,730 1,755
e. The average after-tax profit margin on business capital of current businesses is 12%.
Requirement: Estimate the value of Alpha Company using the GW method?

Problem 23. HBC is a one-member LLC owned by the State and is in the process of
converting into a joint stock company, with the following documents:
a. Extract data from the balance sheet on 31/12/N. Unit: 1,000,000 VND
Asset 1/1/N 31/12/N Capital 1/1/N 31/12/N
A. Current assets 680 750 A. Liabilities 920 930
1. Capital in money 70 60 1. Short-term debt 230 220
2. Short-term investment 20 30 2. Long-term debt 690 710
3. Short-term receivables 160 180 B. Equity 810 850
4. Inventory 420 460 1. Owner's 650 650
5. Other short-term assets 10 20 investment capital
B. Long-term assets 1,050 1,030 2. Funds 120 130
1. Residual value of fixed 900 860 3. Undistributed 40 70
assets after-tax profits
2. Long-term financial 80 90 4. Other sources of - -
investment funding and funds
3. Construction in progress 70 80
costs

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 4. Long-term margin and - -
deposit
Total 1730 1780 Total 1730 1780
b. Original price and accumulated depreciation of each group of fixed assets as of
31/12/N:
Fixed assets group Original price Accumulated depreciation
1. Houses and architectural 950 500
objects 680 450
2. Machinery and 250 180
equipment 130 50
3. Means of transport 60 30
4. Management tools
5.Other fixed assets
total 2,070 1,210
c. According to the document guiding inventory and re-evaluation of fixed assets dated
31/12/N:
- The revaluation coefficient of fixed assets: Houses and architectural objects is
0.7; Machinery and equipment is 0.8; Means of transport is 0.6; Management instrument
is 0.6; Other fixed assets are 0.7.
- The residual value coefficient for inventory is 0.85
- Other assets and liabilities remain unchanged.
d. Statistics on business capital and profit after tax in recent years (million VND)
Year N–3 N–2 N–1 N
Targets
1. Profit after tax 90 110 115 127
2. Average business capital 1,620 1,690 1,730 1,755
e. The average after-tax profit margin on business capital of current businesses is 11%.
Requirement: Estimate the value of HBC Company using the GW method?

Problem 24. The information of 3 enterprises X, Y, Z doing business in the same industry
as enterprise A is as follows:
Unit: 1,000 VND
Targets X Y Z
1. Revenue 26,500,000 13,200,000 10,500,000
2. Net profit 2,300,000 1,200,000 800,000
3. Depreciation + Net profit 3,700,000 2,300.00 1,100,000

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 4. Number of outstanding shares 1,500,000 1,200,000 500,000
5. Share price on the market 12 5 7

In recent years, enterprise A has achieved an average revenue of 30 billion VND,

net profit of 2 billion VND and annual depreciation of fixed assets of 1.5 billion VND.
Using the P/E ratio method, estimate the value of business A based on the situation
of the 3 businesses X, Y, Z mentioned above.

Problem 25. The information of 3 enterprises A, B, C operating in the same industry as

enterprise A is as follows:
Unit: 1,000 VND
Targets A B C
1. Revenue 25,500,000 13,800,000 12,500,000
2. Net profit 2,350,000 1,350,000 890,000
3. Depreciation + Net profit 3,500,000 2,600.00 1,150,000
4. Number of outstanding shares 1,500,000 1,100,000 500,000
5. Share price on the market twelfth 5 7

In recent years, enterprise D has achieved an average revenue of 25.5 billion VND,
net profit of 1.8 billion VND and annual depreciation of fixed assets of 1.5 billion VND.
Using the P/E ratio method, estimate the value of business D based on the
information of the 3 businesses A, B, and C mentioned above.

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