I need an answer to the following growth dividend method question. I only need required A

QUESTION 1 (4o Marks) Mr. Hull holds 18% of the issued share capital of PIP (Pty) Ltd a paper and pulp company trading within South Africa as well as exporting a substantial portion of its production to Zimbabwe and Mozambique. He has approached you to value his shareholding. The company has historically been a family owned company but its shareholding has changed substantially over the last 5 years as several family members have dis- invested due to family disagreements. The company has for many years been a leader in its field but fierce competition and the partial closure of its Zimbabwean interests due to political pressure have harmed the business. The company growth has also been hindered due to the family's reluctance to modernise its operations. PIP is well situated in relation to its suppliers and holds long term agreements with several wood suppliers that will ensure its viability for at least 10 years. Pulp Ltd, a quoted company has approached Mr. Hull to purchase his 18% holding as Mr. Hull has announced that he is emigrating to Australia and wishes to offer his shareholding to existing shareholders who own more than a 3% shareholding as required by the articles of PIP (Pty) Ltd. Pulp Ltd is a modern company in the same industry as PIP and has an impressive growth record, an expanding export market and strong management but its future growth is inhibited due to a lack of raw material suppliers. The balance sheet and income statements for PIP (Pty) Ltd show the following: Balance sheet of PIP (Pty) Ltd as at 31 August 2020 Ft Ordinary share capital Authorised 200 000 shares of R1 each 200 000 Issued 150 000 shares of R1 each 150 000 Distributable reserves 1 650 000 Long term loans 500 000 2 300 000 Employment of Capital: Freehold property 1 700 000 Plant and Machinery 350 000 Vehicles and Furniture 350 000 Current assets: 150 000 Stock 100 000 Debtors 50 000 Current liabilities: 250 000 Creditors 80 000 Bank overdraft 170 000 2 300 000 Income statement for the past four years 2020 2019 2018 2017 R'000 R'000 R'000 R'000 Trading income 1 043 1 169 1 284 1 116 Abnormal item 100 (60) (60) 40 1143 1109 1224 1156 Depreciation: -Plant and Machinery 185 185 220 250 -Vehicles and Furniture 30 25 25 25 Interest: -Bank overdraft 46 24 18 10 -Long term loan 90 90 90 90 Income before tax and extraord. Items 792 785 871 378 Taxation 290 355 391 31 1 Net income after tax 502 430 480 470 You are given the following additional information: 1. The ordinary shares are currently held as follows: Mr. Hull 18 Financial Director Mr. F Mqauyi 28 Company founder and Managing Director Mr. E. Mqauyi 4 Son of Mr. F. Mqauyi Ms. A. Mqauyi 4 Daughter of Mr. F. Mqauyi Pulp Ltd 22 Competitor Other g In hands of Investors None own more than 2% 100 2. The company has followed a policy of paying dividends equal to 75% of net income after tax. 3. Mr. Mqauyi is well passed retiring age and he has always wished that his son or daughter would take over the running of the company but regrettably none of them has shown an interest in the business. 4. The Company tax rate has been 28% for the past 4 years. 5. Abnormal item. The abnormal item is due to foreign exchange profit and losses on export sales. In 2019 an amount of R60 000 was also paid as a result of a freak accident against which the company was not insured. The abnormal items have no tax implications. 6. Financial information of Pulp Ltd Gl'OWth 870 Debt/Equity ratio 1:2 Current assets: Current liabilities 2:1 Ke 1 1% REQUIRED a) Value the 18% shareholding of Mr. Hull as requested by him. Using the dividend growth method your valuation must fully describe all relevant factors and assumptions to take in consideration in arriving at an applicable Ke. (25) b) Do a reasonableness Test using the Net asset value method