Question
Refer to the table containing a companys financial statements below: Year ending 30-Jun-18 Number of shares on issue 4,320,601 Cash $6,105,465 Company tax rate 30.00%
Refer to the table containing a companys financial statements below:
Year ending | 30-Jun-18 | Number of shares on issue | 4,320,601 | |
Cash | $6,105,465 | Company tax rate | 30.00% | |
Other assets | $87,554,597 | Weighted average cost of capital | 11.44% | per annum |
Debt and liabilities | $32,190,949 | Growth rate in FCFs from 2022 | 5.48% | per annum |
Equity (book value) | $61,469,113 |
Year ending | 30-Jun-18 | Growth rate | 30-Jun-19 | 30-Jun-20 | 30-Jun-21 | 30-Jun-22 |
Sales revenue | $78,528,535 | 3.20% | $81,041,448 | $83,634,774 | $86,311,087 | $89,073,042 |
Operating expenses | $45,500,703 | 2.70% | $46,729,222 | $47,990,911 | $49,286,666 | $50,617,406 |
Depreciation | $22,321,855 | 4.10% | $23,237,051 | $24,189,770 | $25,181,551 | $26,213,994 |
EBIT | $10,705,977 | $11,075,175 | $11,454,093 | $11,842,871 | $12,241,642 | |
Interest paid | $3,908,199 | 7.30% | $4,193,498 | $4,499,623 | $4,828,095 | $5,180,546 |
Tax payable | $2,039,333 | $2,064,503 | $2,086,341 | $2,104,433 | $2,118,329 | |
Net income | $4,758,445 | $4,817,174 | $4,868,129 | $4,910,343 | $4,942,767 | |
Capital expenditure | $16,170,094 | 6.00% | $17,140,300 | $18,168,718 | $19,258,841 | $20,414,371 |
Increase in working capital | $2,551,414 | 2.50% | $2,615,199 | $2,680,579 | $2,747,594 | $2,816,284 |
(a) Work out last year's (year ending 30 June 2018) free cash flows and the projected free cash flows (30 June 2019 30 June 2022) from these extracts from the company's financial statements. (3 marks)
(b) Work out the Terminal Value of the free cash flows in 30 June 2021, using constant growth rate from 2022. (2 marks)
(c) Work out the enterprise value from the free cash flows and the terminal value. (2 marks)
(d) Display the value per share of the equity in this company. (2 marks)
(e) Recalculate the value per share, based on mid-year discounting (with a nominal conversion of the annual discount rate) of the free cash flows. (1 mark)
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