Consider the data below to perform valuation for your company using the free cash flow valuation model. The companys weighted average cost of capital is 12%, and it has R1,400,000 of debt at market value and R500,000 of preferred shares at its assumed market value. The estimated free cash flows over the next five years, 2014 through 2018, are given below. Beyond 2018 to infinity, the company expects its free cash flow to grow by 4% annually.

Year (t) Free cash flow (FCFt)

2014 R250,000

2015 290,000

2016 320,000

2017 360,000

2018 400,000

Required:

1.1. Estimate the value of your companys entire company using the free cash flow approach. (5)

1.2. Use your findings in part (1.1), along with the data provided above, to find the companys ordinary share value. (5)

1.3. If the company plans to issue 220,000 shares of ordinary shares, what is the estimated value per share? (5)