Question 1. Jason Klein is an equity analyst. He analyses the financial statements of Romans Limited. From the analysis, he draws the following conclusions and assumptions:

? FCFE and earnings of Romans Limited will grow at 13.5% for 2 years where after it will stabilise to 5% per annum indefinitely.

? The current dividend payout ratio will be maintained by Romans Limited.

? The beta of Romans shares is 1.2.

? The market equity risk premium is 5.5% and the current government bond yield is 3.2%.

? A recent dividend of R3.10 was declared and paid by Romans Limited to its shareholders.

? The number of ordinary shares outstanding in 2019 is 10 000.

Romans Limited's Cash Flow Statement at June 30, 2019 (in thousands) Refer to the image attached

Cash flow from operating activities Net income 50,000 Depreciation 8,400 Change in working capital (increase) Decrease in receivables (5,500) (increase) Decrease in inventories 4,200 Increase (Decrease) in payables 3,100 Increase (Decrease) in other current liabilities 3,200) Net change in working capital (1,400) Net cash ow from operating activities 57,000 Cash flow from investing activities Purchase of fixed assets {PPE} 20,000) Net cash from investing activities (20,000} Cash flow from nancing activities Change in debt outstanding 5,550 Payment of cash dividends (24,420) Net cash from nancing activities (18,870) Net change in cash and cash equivalents 18,130 Beginning-ofperiod cash 1920 End-of-period cash 28,050