(a) ATZeta Plc is a UK company and is considering the acquisition of ChinaMe Plc, a Chinese company from which it imports many of the products it sells in the UK and Europe. The management ATZeta Plc seeks to determine the expected net cash flows for the company for the next three years in Great Britain pounds (GBP). The llowing information holds 201 42 201 Denominated FCFF (in millions) in Yuan (CNY) CNY Inflation Ratev GBP inflation Ratee Current Spot Rate (GBP per CNY) = 8.55e 35 2.83%2.53%2.33 2.80% 2.32% 2.25% Required. 1. Calculate ChinaMe's projected Free Cash-Flows to the Firm (FCFF) in GBP. 2. Determine the ChinaMe's enterprise value in GBP if no growth in its FCFF after 2020 is expected. The 10-year T-bond is 5% and market premium for stocks over the risk free rate is 5.5%. Borrowing rate for companies exhibiting levels of creditworthiness similar to ATZeta is 7% and ATZeta's beta is estimated to be 1 ATZeta debt-to-total capital ratio is 30%. Tax rate is 40% (13 marks) (b) Explain how the Adjusted Present Value method (APV) is used in valuing Leverage Buy Outs (LBOs) and discuss its advantages and disadvantages