1. WHAT CAN THE COMPANY'S P/E RATIO BE USED FOR? WHAT ARE THE PROBLEM WITH USING THIS RATIO, ESPECIALLY WHEN VALUING A COMPANY?

2. YOU WERE ASSIGNED THE TEAM LEADER FOR THE VALUATION OF THE COMPANY. THE FOLLOWING DATA WAS AVAILABLE

# OF SHARES ISSUED AND OUTSTANDING 300,000,000

CURRENT MARKET VALUE OF EQUITY 2,600,000,000

DEBT 1,800,000,000

6% PREF SHARES 1,000,000,000

CASH AT BANK 500,000,000

BETA 1.40

TAX RATE 25%

CURRENT AND PROJECTED T-BILL RATE 2%

MARKET RISK PREMIUM 12%

YTM ON DEBT 5%

CURRENT AND PROJECT ECONOMY GDP 1.70%

DEPRECIATION (ANNUALLY) $35,000,000

ESTIMATED EBIT FOR 2021 $900,000,000

FCF GROWTH RATE (2022&2023) 8%

CALCULATE THE WACC

COMPUTE THE VALUE OF THE FIRM

COMPUTE THE PRICE PER SHARE FOR THE ORDINARY SHARE