24. Company valuation Chiara Company's management has made the projections shown in Table 19.5. Use this table as a starting point to value the company as a whole. The WACC for Chiara is 12%, and the forecast long-run growth rate after year 5 is 4%. The company, which is located in South Africa, has ZAR 5 million of debt and 865,000 shares outstanding. What is the value per share? Historical Forecast Year 1. Sales 2. Cost of goods sold 3. Other costs 4. EBITDA (1 -2-3) 5. Depreciation 6. EBIT (Pretax profit) (4-5) 7. Tax at 28% 8. Profit after tax (6-7) 9. Change in working capital 10. Investment (change in gross fixed assets) -2 35,348 17,834 6,968 10,546 5,671 4,875 1,365 3,510 325 5,235 -1 39,357 18,564 7,645 13,148 5,745 7,403 2,073 5,330 566 6,467 0 40,123 22,879 8,025 9,219 5,678 3,541 991 2,550 784 6,547 1 36,351 21,678 6,797 7,876 5,890 1,986 556 1,430 -54 7,345 2 30,155 17,560 5,078 7,517 5,670 1,847 517 1,330 -342 5,398 3 28,345 16,459 4,678 7,208 5,908 1,300 364 936 -245 5,470 4 29,982 15,631 4,987 9,364 6,107 3,257 912 2,345 127 6,420 5 30,450 14,987 5,134 10,329 5,908 4,421 1,238 3,183 235 6,598 TABLE 19.5 Cash flow projections for Chiara Corp. (ZAR thousands) 24. Company valuation Chiara Company's management has made the projections shown in Table 19.5. Use this table as a starting point to value the company as a whole. The WACC for Chiara is 12%, and the forecast long-run growth rate after year 5 is 4%. The company, which is located in South Africa, has ZAR 5 million of debt and 865,000 shares outstanding. What is the value per share? Historical Forecast Year 1. Sales 2. Cost of goods sold 3. Other costs 4. EBITDA (1 -2-3) 5. Depreciation 6. EBIT (Pretax profit) (4-5) 7. Tax at 28% 8. Profit after tax (6-7) 9. Change in working capital 10. Investment (change in gross fixed assets) -2 35,348 17,834 6,968 10,546 5,671 4,875 1,365 3,510 325 5,235 -1 39,357 18,564 7,645 13,148 5,745 7,403 2,073 5,330 566 6,467 0 40,123 22,879 8,025 9,219 5,678 3,541 991 2,550 784 6,547 1 36,351 21,678 6,797 7,876 5,890 1,986 556 1,430 -54 7,345 2 30,155 17,560 5,078 7,517 5,670 1,847 517 1,330 -342 5,398 3 28,345 16,459 4,678 7,208 5,908 1,300 364 936 -245 5,470 4 29,982 15,631 4,987 9,364 6,107 3,257 912 2,345 127 6,420 5 30,450 14,987 5,134 10,329 5,908 4,421 1,238 3,183 235 6,598 TABLE 19.5 Cash flow projections for Chiara Corp. (ZAR thousands)