The following information has been taken from the income statement and statement of financial position of A Co:

Revenue $350m

Production expenses $210m

Administrative expenses $24m

Tax allowable depreciation $31m

Capital investment in year $48m

Corporate debt $14m trading at 130%

Corporate tax is 30%

The WACC is 16.6%. Inflation is 6%.

These cash flows are expected to continue every year for the foreseeable future. Required:

1. Calculate the value of equity.

2. Critically discuss the Advantages and disadvantages of Discounted Cash Flow Basis Method.