Olympus Estate Ltd (Olympus) is a canning factory established in 1993. Over the last few years the company has been growing steadily. You have been approached by Olympus to determine the equity value of the company to be used for setting the price per share for its listing on the Johannesburg Stock Exchange (JSE). To assist you with the valuation you paid Queue Analysts to provide you with forecasts of Olympuss Free cash flow and Statement of Financial Position for the next 3 years. Extracts of the forecasts have been provided below: Projected Free cash flow for the years ended 30 September Projected Projected Projected 2020 2021 2022 R000 R000 R000 Free cash flow 5 315 6 305 6 621 Projected Statements of Financial Position at 30 September Projected Projected Projected 2020 2021 2022 Notes R000 R000 R000 Non-current Assets Property, Plant and Equipment 28 310 28 467 29 494 Investments 3 704 4 062 4 216 Current Assets Inventory 22 526 24 671 26 363 Accounts Receivable 15 403 17 119 18 086 Cash 2 467 2 105 1 078 TOTAL ASSETS 72 410 76 424 79 237 Ordinary Shares 1 9 200 9 200 9 200 Retained Earnings 18 691 24 171 30 866 Shareholders Equity 27 891 33 371 40 066 13% Non-redeemable Debentures 2 13 670 13 670 13 670 Current Liabilities Accounts Payable 30 849 29 383 25 501 TOTAL EQUITY AND LIABILITIES 72 410 76 424 79 237 Notes 2019 EXAMINATION 1. Olympus has an authorized share capital of 30 million shares with 25 million currently in issue. It does not intend issuing more shares for the JSE listing but rather that current shareholders will sell their shares to the broader public in order to list. 2. The debentures issued by Olympus are non-redeemable and were issued at an interest rate of 13% per annum. Companies of similar risk to Olympus are currently issuing debentures at 12% per annum. Additional Information The return on 10 year South African government bonds is 8.2% per annum. The average return on the JSE has been 15.87% per annum and Olympuss beta is 1.47. Olympus has a target debt to equity ratio of 35:65. Olympuss free cash flows are expected to grow at a rate of 6.5% per annum after 2022. Round answers to the nearest R1 000. The company tax rate is 28% with 80% of capital gains included in taxable income. Assuming a WACC of 14%, calculate the value of the ordinary equity of Olympus at 30 September 2019 using the Free Cash Flow to the Firm method of valuation.