Question $2.$ Suraj Technology Limited $($STL$)$ is in the development of software products. STL is contemplating to merge with Chandraj Technology Limited $($CTL$),$ which is involved in the same type of business.

The following are the details pertaining to two potential merger companies:

Revenues and EBITs of the firm is expected to grow at $12\%$ a year in the long term. Capital spending is expected to be offset by depreciation. The betas of the firm is $1\mathrm{.}2$ and it is rated

$\text{'}$B$\text{'}$ with annual interest rates of $11\mathrm{.}5\%$ on their debts. Treasury Bills are currently trading in the market at $7\%$ p$.$a and the market is able to generate $8\%$ p$.$a more return than the return on Treasury Bills.

You are required to

a$.$ Estimate the value of STL operating independently.

b$.$ Looking at the market value of equity and the firm valuation arrived at by you, what are the three key things that you will suggest to management to make the firm valuations$$higher$?$