Ngara Solutions is a software company located in Nairobi Kenya. The company earned twenty million Kenya shillings before Interest and Taxes on turnover of sh. 60 million in the most recent period. During the recent period, investment in property, plant and equipment was ten million Kenya shillings, and Amortization and Depreciation was at five million. Working capital investment was 10 percent of the turnover. Ngara Solutions expect earnings before interest and taxes, investment in property, plant and equipment, investment in working capital, amortization and depreciation and turnover to grow at 10 percent per year for ten years. After the ten year, the growth in turnover, earnings before interest and taxes, and working capital investment will decline to stable 3 percent per year, and investment in property, plant and equipment and Amortization and Depreciation will offset each other.

Ngara Solutions has an effective tax rate of 30 percent. Assume that the weighted average cost of capital is 12 percent during the high growth stage and 8 percent during the stable growth stage.

Required:

(i) Calculate the Free cash Flow to the Firm for most recent period

(ii) Calculate Horizon Value

(iii) The value of Ngara Solutions using the Free Cash Flow to the Firm model