a) Ganyo Kovey Tagator owns GKT Co Ltd. GKT Co Ltd is listed on the Ghana Stock Exchange. Recent developments have pointed out that GKT Co Ltd is a potential target for acquisition by financial analysts. The value of GKT Co Ltd however has become a topical issue, specifically a public debate in recent days. The following financial information on GKT Co Ltd are available. Years 2017 2018 2019 2020 Profit after tax/ Net Income (GH000) 4,250 4,450 4,850 5,050 Total dividend paid (GH000) 2,500 2,600 2,800 3,000 The free cash flows of the business over the next ten years are estimated as follows: Year GH000 2020 7,000 2021 8,000 20222029 10,000 Statement of financial position as at 2020 GH000 GH000 Non-current assets 40,500 Current assets Inventory 1,900 Trade receivable 2,250 4,150 44,650 Equity Ordinary shares 10,000 Reserves 18,600 28,600 Non-current liabilities 8% bonds 12,500 Current liability 3,550 44,650 Additional Information: i. The cost of capital for GKT Co Ltd is 10 per cent ii. The cost of equity of GKT Co Ltd is 9% per year. Required: Calculate the value of GKT Co Ltd using the following methods:Page 7 of 11 i. Dividend growth model using: () the compound annual dividend growth rate; () Gordons growth model (the sustainable growth rate model). [ 7marks] ii. Free cash flow basis (assuming a ten-year life for the business). [ 6marks] b) Discuss the relative merits of the valuation methods in part (ai & aii) above in determining a purchase price for GKT Co Ltd. [ 5 marks] c) Lion Den Company ltd, one of the biggest indigenous telecom companies in Ghana, has recently engaged the services of PMW Ltd, a multinational audit firm, to carry out among other things a comprehensive forensic audit into its books. The audit report has made interesting revelations. One of the key findings suggests that Lion Den Company Ltd has some significant amount of surplus assets in the company. Required: Discuss, as the financial manager of Lion Den Company Ltd, the strategic investment decisions you will make concerning the surplus assets of the company. [7marks]