Additional information: Depreciation (2018): R483. The firm spent R250m in profitable projects during the course of 2018 • WACC : 15% Cost of equity of the firm: 10% Tax rate : 40% Table 2: FBC statement of comprehensive income (R millions except for share data) 2018 2017 Total revenues EBIT R3 175 R3 075 495 448 Interest expense Net Income Dividends per share 104 101 235 208 R0.80 R0.80 Use the information given, to answer the following: a) Calculate the Free Cash Flow to the Firm (FCFF) for the .8a] b) You are told that the Free Cash Flow to Equity (FCFE) of the firm will continue to grow at a rate of 5% for the next 3 years, after which it will stabilize to a rate of 3%. Calculate the intrinsic value of each of FBC' shares. 9 (Use 2.d.p in your calculations & final answer for this question)

Additional information: Depreciation (2018): R483. The firm spent R250m in profitable projects during the course of 2018 • WACC : 15% Cost of equity of the firm: 10% Tax rate : 40% Table 2: FBC statement of comprehensive income (R millions except for share data) 2018 2017 Total revenues EBIT R3 175 R3 075 495 448 Interest expense Net Income Dividends per share 104 101 235 208 R0.80 R0.80 Use the information given, to answer the following: a) Calculate the Free Cash Flow to the Firm (FCFF) for the .8a] b) You are told that the Free Cash Flow to Equity (FCFE) of the firm will continue to grow at a rate of 5% for the next 3 years, after which it will stabilize to a rate of 3%. Calculate the intrinsic value of each of FBC' shares. 9 (Use 2.d.p in your calculations & final answer for this question)

Entrepreneurial Finance

6th Edition

ISBN:9781337635653

Author:Leach

Publisher:Leach

Chapter7A: Using Wacc To Complete The Calibration Of Eva

Section: Chapter Questions

Problem 1EP

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