1. You have been supplied with the following financial forecasts for Dragon Ltd for 2021-22 (the financial year ending 30 June, 2022).

• EBIT (Earnings before interest and taxes), $75,000,000
• Annual depreciation, $6,000,000
• New capital expenditure, $18,000,000
• Increase in NWC (net working capital), $10,500,000
• Interest expense, $9,000,000
• Additional net debt, $8,000,000
• Number of fully paid ordinary shares issued, 10,000,000
• Company tax rate, 30%.

REQUIRED:

Calculate for Dragon Ltd Ltd, over 2021-22,

1. The free cash flow for the firm (FCFF) over 2021-22;
2. The free cash flow to equity (FCFE) over 2021-22; and
3. The intrinsic value of one ordinary share in Dragon Ltd at 30 June, 2021, based on the present value of the FCFE in perpetuity, assuming a rate of annual growth in FCFE of 4% per annum each year after 2021-22 and a discount rate (required return) of 12% per annum.