Mangaung Essentials (ME) provides personal protective equipment (PPE). The company earned R20 million before interest and tax on revenues of R60 million last year. Investment in fixed capital was R12 million, and depreciation was R8 million. The increase in Working Capital Investment was R3 million. ME expects EBIT, investment in fixed capital, depreciation, sales, and the increase in investment in working capital to grow at 12% per year for the next five years. After 5 years, the growth in sales, EBIT, fixed capital investment, depreciation and increase in working capital investment will decline to a stable 4% per year. ME's tax rate is 40%. The cost of equity for the firm is 15%. The WACC of the firm is initially 11%.

Thecurrent free cash flowto the firm is equal to R million. TheFCFFfor years 2; 3; 4 and 5 is R million; R million; R million and R million, respectively. Theterminal valueat the end of year 5 is equal to R millionand thevalue of the firmis equal to R million.