Natref is looking into the acquisition of Marine Oils. Marine Oils has 1 (one) million shares outstanding and a target capital structure of 30% debt, its beta is 1.4. Marine Oils has R10.82 million in debt trading at par value and pays 8% interest. Marine Oils free cash flow (FCFo) is R2 million per year and it is expected to grow at constant rate of 5% a year. Marine Oils pays 40% corporate tax. The risk free rate of interest is 5% and the market risk premium is 6%. Natref needs to estimate intrinsic value of Marine Oils before making a final decision on this proposed acquisition. MBL922N

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3.1. What are Marine Oils cost of equity and weighted average cost of capital? [5]

3.2. What is Marine Oils intrinsic value of operations? [5]

3.3. What is the current intrinsic value of Marine Oils stock? [5]