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Your company requires a capital injection of R10 million for equipment replacement and working capital . The investment is required over a period of 4

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Your company requires a capital injection of R10 million for equipment replacement and working capital . The investment is required over a period of 4 years. Use the current financial statements of your company to estimate the cash flows. It is expected that your company will grow at 10% for the next 4 years. Beyond 4 years after capital injection, it is expected that the company will grow at constant rate of 4% for the foreseeable future. Therefore, continuing value should also be taken into consideration when performing valuation. Assume the following: rps = 9%; rd=10%; T =25% rre = 5.6%; RPM = 6%;b = 1.2 Debt: Price of the bond = R1,153.72; no of bonds = 70,000 bonds Preferred shares: Price = R116.95; no of shares = 200,000 shares Ordinary shares (common): Price = R50.000; no of shares = 3 million shares Required: Perform a valuation analysis taking into consideration for the following: 1. Weighted Average cost of capital (WACC) [20] 2. Valuation of your own company (before capital injection). [20] 3. Continuing (Terminal) value of the company after capital injection. [10] 4. Present value of the cash flow of the company (after capital injection). [30] 5. Valuation of the company (after capital injection). [5] 6. Assess if the capital injection created value for the company. 15]

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