can you solve all?

Learning Outcomes addressed and assessed in this Assignment: 1. Analyse the financial performance of given securities 4. Apply techniques to value securities BAAF III VSA Assignment Brief: PARTA TELECORP ("TELECORP) Limited is a multinational company in th Telecommunications sector. It has grown organically over the last yeats TELECORP fee it has exhausted organic growth and is now reviewing a strategic plan to acquire a number companies to achieve synergies and to meet their growth forecasts. Telecoop has a policy valuing the shares in a company using the free cash flows to quity model After much consideration TELECORP identified DIGICALL a small Telecommunications company as an acquisition opportunity. TELECORP and DIGICALL both operate in the same industry You have been provided with the extracts of the financial statements of DIGICALL for la year (2020) Statement of Profit and loss and Other Comprehensive Income of DIGICALL 90 2020 $39 000 Profit before interest and Tax Loan Interest (1081 Profit before tas 429 Tax (86) Profit after Tax Extract from the Statement of Financial Position of DIGICALL. for 2020 000 Non-Current Assets 1.825 Additions 88 1.913 Accumulated Depreciation (497) 1.416 Current Assets 485 Long term loan (1.200) Net Assets 701 . Notes: The following projections have been made for the next three (2021 to 2023) years Profit before interest and tax will grow at a rate of 7%. per annum Depreciation is charged at 12% per annum on the year cod decurrent asset balang before accumulated depreciation. Depreciation of 195.000 has been charged in th above calculation of profit before interest and tax It can be assumed thi depreciation is allowable for tax purposes. The company will not dispose of any of its non-current assets in the next three year but will increase its investment in non-current assets by 20% per annum. In th current year the investment in non-current assets was 92.000 The company pays fixed interest on its outstanding foam of per annum The level of the loan of 1,300,000 will be maintained for the coming years. The investment in working capital (equivalent to current assets is expected to increas . Notes: The following projections have been made for the next three (2021 to 2023) years: Profit before interest and tax will grow at a rate of 7% per annum Depreciation is charged at 12% per annum on the year-end non-current asset balance before accumulated depreciation. Depreciation of 195.000 has been charged in the above calculation of profit before interest and tax It can be assumed that depreciation is allowable for tax purposes The company will not dispose of any of its non-current assets in the next three years but will increase its investment in non-current assets by 20% per annum. In the current year the investment in non-current assets was 92.000, The company pays fixed interest on its outstanding loan of 9 per annum The level of the loan of 1,300,000 will be maintained for the coming years . The investment in working capital (equivalent to current assets) is expected to increase in line with growth in profit before interest and tax Alter the three year planning borizon it is estimated that the cashflows of DIGICALL will grow at a rate of 6% per annum indefinitely The cost of equity is 10% per annum The tax rate is 20% REQUIREMENT: Prepare a report and advise the following: a) Estimate the market value of equity of DIGICALL using the free cash flow model to quity model (30 marks) () Advise TELECORP of the uncertainties and assumptions of using the tree cash flow to cquity model for valuation purpose (5 marks) c) Evaluate two ways in which TELECORP can achieve growth organically? (10 Marks) acquisition va) Critically review the synergies that could be achieved by Telecorps from the or Digicall (20 marks) e) Analyse three important factors that will be required to result in successful acquisition. (9 marks) In your opinion what are the main factors that could lead to the failure of the acquisition? (11 mark) Report format, Critical thinking and marks research beyond material provided. (10 marks) Layout & Presentation (3 marks) Total 100 marki Total Learning Outcomes addressed and assessed in this Assignment: 1. Analyse the financial performance of given securities 4. Apply techniques to value securities BAAF III VSA Assignment Brief: PARTA TELECORP ("TELECORP) Limited is a multinational company in th Telecommunications sector. It has grown organically over the last yeats TELECORP fee it has exhausted organic growth and is now reviewing a strategic plan to acquire a number companies to achieve synergies and to meet their growth forecasts. Telecoop has a policy valuing the shares in a company using the free cash flows to quity model After much consideration TELECORP identified DIGICALL a small Telecommunications company as an acquisition opportunity. TELECORP and DIGICALL both operate in the same industry You have been provided with the extracts of the financial statements of DIGICALL for la year (2020) Statement of Profit and loss and Other Comprehensive Income of DIGICALL 90 2020 $39 000 Profit before interest and Tax Loan Interest (1081 Profit before tas 429 Tax (86) Profit after Tax Extract from the Statement of Financial Position of DIGICALL. for 2020 000 Non-Current Assets 1.825 Additions 88 1.913 Accumulated Depreciation (497) 1.416 Current Assets 485 Long term loan (1.200) Net Assets 701 . Notes: The following projections have been made for the next three (2021 to 2023) years Profit before interest and tax will grow at a rate of 7%. per annum Depreciation is charged at 12% per annum on the year cod decurrent asset balang before accumulated depreciation. Depreciation of 195.000 has been charged in th above calculation of profit before interest and tax It can be assumed thi depreciation is allowable for tax purposes. The company will not dispose of any of its non-current assets in the next three year but will increase its investment in non-current assets by 20% per annum. In th current year the investment in non-current assets was 92.000 The company pays fixed interest on its outstanding foam of per annum The level of the loan of 1,300,000 will be maintained for the coming years. The investment in working capital (equivalent to current assets is expected to increas . Notes: The following projections have been made for the next three (2021 to 2023) years: Profit before interest and tax will grow at a rate of 7% per annum Depreciation is charged at 12% per annum on the year-end non-current asset balance before accumulated depreciation. Depreciation of 195.000 has been charged in the above calculation of profit before interest and tax It can be assumed that depreciation is allowable for tax purposes The company will not dispose of any of its non-current assets in the next three years but will increase its investment in non-current assets by 20% per annum. In the current year the investment in non-current assets was 92.000, The company pays fixed interest on its outstanding loan of 9 per annum The level of the loan of 1,300,000 will be maintained for the coming years . The investment in working capital (equivalent to current assets) is expected to increase in line with growth in profit before interest and tax Alter the three year planning borizon it is estimated that the cashflows of DIGICALL will grow at a rate of 6% per annum indefinitely The cost of equity is 10% per annum The tax rate is 20% REQUIREMENT: Prepare a report and advise the following: a) Estimate the market value of equity of DIGICALL using the free cash flow model to quity model (30 marks) () Advise TELECORP of the uncertainties and assumptions of using the tree cash flow to cquity model for valuation purpose (5 marks) c) Evaluate two ways in which TELECORP can achieve growth organically? (10 Marks) acquisition va) Critically review the synergies that could be achieved by Telecorps from the or Digicall (20 marks) e) Analyse three important factors that will be required to result in successful acquisition. (9 marks) In your opinion what are the main factors that could lead to the failure of the acquisition? (11 mark) Report format, Critical thinking and marks research beyond material provided. (10 marks) Layout & Presentation (3 marks) Total 100 marki Total