A) Value an ordinary share of AYR Ltd using the free cash flow model. Assume current date is 2017.

Given information:

Weighted average cost of capital: 11%

Value of debts: $1,500,000

Value of preference shares: $400,000

Forecast free cash flows:

2018$200,000

2019$250,000

2020$310,000

2021$350,000

2022$390,000

Number of ordinary shares: 200,000

Assume a zero growth rate beyond 2022.

B) Examine the advantages and disadvantages of different share valuation models.