Lambexton Trucking (Pty) Limited was established in 2018 as a logistics company that operates in South Africa and the SADC region. The company is privately owned by the Sibanda family. The company has a fleet of thirty-three trucks that were bought new at the start of the business. The company is financed by 60% debt and 40% equity. Total capital is R100 million. The industry is very competitive but lucrative. The average price-to-earnings ratio (P/E) for the industry is 7x. The Directors believe that a P/E ratio of 6 is appropriate for the valuation of the company. Industry beta is 1.3. However, the directors of Lambexton believe that since the company is not listed on the JSE, its beta should be adjusted upwards to 1.5. The three months Treasury bill rate is 9.3% while the market risk premium is 7%. Extracts from the company's financial statements reveal the following: 

• Recently paid dividend = 230 cents 

• Dividend payout ratio = 30% 

• The company's cost of debt = 12%

• The corporate tax rate = 28% 

• Net income available to common shareholders = R55m 

• Interest expenses = R16m 

• Depreciation = R20m 

• Investment in fixed capital = R35m  

• Investment in working capital = R10m 

• Net borrowing = R12m 

• Stable growth rate of FCFF = 5.0 percent 

• Stable growth rate of FCFE = 6.0 percent 

• Dividend growth rate = 5%.

Required: 

(a) Ignoring the expansion option presented above, determine the 

(i) price per share using the P/E method. Hint: use the payout ratio to determine EPS.

 (ii) cost of equity

 (iii) price per share using the dividend growth model 

 (iv) weighted average cost of capital

(v) current value of FCFF

 (vi) value of the firm and equity using FCFF

 (vii) current value of FCFE

 (viii) value of equity using FCFE