Use the following information to answer questions 5 to 6. Mandisa Kalawe wants to value Nkosi Ltd using a single-stage free cash flow to the firm (FCFF) approach. Kalawe gathered the following information regarding Nkosi Ltd. The total assets of Nkosi Ltd are financed with four times as much equity capital as of debt capital. Shares outstanding R400 000 Market value of debt R660 140 Most recent FCFF R420 150

Shares outstanding	R400 000
Market value of debt	R660 140
Most recent FCFF	R420 150
Beta	0.80
Return on the market index	10%
Risk-free rate	4%
Before tax cost of debt	6.50%
Tax rate	30%
FCFE growth rate	4%
FCFF growth rate	3%

Calculate the weighted average cost of capital (WACC) of Nkosi Ltd.

a.

7.08%

b.

7.95%

c.

9.13%

Calculate the value of the firm of Nkosi Ltd using the single-stage FCFF approach.

a.

R7 614 325

b.

R8 742 515

c.

R10 329 929