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a) Suppose Free Cash Flow to the Firm (FCFF) for Korsakov Corporation is R1 million for 1-4 years, then it is expected to grow at

  1. a) Suppose Free Cash Flow to the Firm (FCFF) for Korsakov Corporation is R1 million for 1-4 years, then it is expected to grow at a rate of 3%. Assume WACC is 15%. If 300 000 shares are outstanding, what is the predicted price of this stock if the firm has R4 000 000 of debt?

(10 marks)

b) List and briefly explain Porters (1980,1985) five determinants of Competition under the context of Industry Structure and Firm Performance.


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