Question 4 [24] You are invited to the shareholders meeting where they will discuss the disposal of 20% of the shares of Isilumko (Pty) Ltd to one of their biggest suppliers, Lucky (Pty) Ltd. To prepare for this meeting you are required to calculate the value of the shares of Isilumko (Pty) Ltd. You have the following extracts from the company's financial statements at your disposal: Proforma income and operating expenses of Isilumko (Pty) Ltd for the years 2022 -2024 2024 2023 2022 Income 4 350 000 3 875 000 3 215 400 Cost of sales Gross profit (2 827 500) 1 522 500 (2 441 250) 1 433 750 (1 993 548) 1 221 852 Operating expenses Accounting fees (150 000) (142 000) Bank charges (89 000) (78 000) Depreciation (50 000) (30 000) Finance (30 000) (28 000) Water and electricity (112 000) (100 800) Salaries and wages (104 500) (139 950) Profit before tax 987 000 915 000 Taxation (276 360) (256 200) Profit after tax 710 640 658 800 The company expects the cash flow to grow at 4% each year. (138 000) (69000) (20 000) (22 000) (90 720) (64 832) 817 300 (222 844) 594 456 The company's weighted average cost of capital is 12%. . Isilumko (Pty) Ltd's authorised and issued share capital is 100 shares at R1.00 each. Required: Calculate the value of 20% of the shares of Isilumko (Pty) Ltd using the free cash flow method. Round off your final answer to the nearest rand. Question 4 [24] You are invited to the shareholders meeting where they will discuss the disposal of 20% of the shares of Isilumko (Pty) Ltd to one of their biggest suppliers, Lucky (Pty) Ltd. To prepare for this meeting you are required to calculate the value of the shares of Isilumko (Pty) Ltd. You have the following extracts from the company's financial statements at your disposal: Proforma income and operating expenses of Isilumko (Pty) Ltd for the years 2022 -2024 2024 2023 2022 Income 4 350 000 3 875 000 3 215 400 Cost of sales Gross profit (2 827 500) 1 522 500 (2 441 250) 1 433 750 (1 993 548) 1 221 852 Operating expenses Accounting fees (150 000) (142 000) Bank charges (89 000) (78 000) Depreciation (50 000) (30 000) Finance (30 000) (28 000) Water and electricity (112 000) (100 800) Salaries and wages (104 500) (139 950) Profit before tax 987 000 915 000 Taxation (276 360) (256 200) Profit after tax 710 640 658 800 The company expects the cash flow to grow at 4% each year. (138 000) (69000) (20 000) (22 000) (90 720) (64 832) 817 300 (222 844) 594 456 The company's weighted average cost of capital is 12%. . Isilumko (Pty) Ltd's authorised and issued share capital is 100 shares at R1.00 each. Required: Calculate the value of 20% of the shares of Isilumko (Pty) Ltd using the free cash flow method. Round off your final answer to the nearest rand
