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You have started a digital based fruit and vegetables business in your town and planning to expand in other cities. But for doing that you

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You have started a digital based fruit and vegetables business in your town and planning to expand in other cities. But for doing that you need additional capitals which could be obtained by selling part of your business to venture capitals or private angel investors. However, you know that to be able to do that you need to value you own business first. Therefore, you need to estimate the number of shares of your business that would need to be put on sale to the investors. Your current year profit before interest and taxes (EBIT) is IDR 1,5 billion from making annual sales of IDR 5 billion, which you expect to grow by an annual average of 20% for the next 5 years. Your also know that you must pay taxes annual taxes at around 25%. Further, the weighted average cost of capitals (WACC) of your business is 12 %, and depreciation of fixed assets is IDR 200 million every year. The business is also making constant annual investment of IDR 500 million. Determine the value of your company using the Discounted Cash Flow (DCF) method, by a. Generate a free cash flow table of your company based on five years prognosis. (10 marks) b. What is the value of your business using the DCF method? (5 marks) c. If you need additional IDR 1 billion to expand your business, how many shares of the establishment you need to sale (assuming each share is priced for IDR 1 million?)

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