Question 2 (17 Marks) Netflieks Financial Data R2.75 ? Current dividends per share Current FCFE per share Current FCFF per share Total Debt per share 336 R200 Nominal interest 3% 1.6% Equity risk premium Beta 0.7 1% Alpha WACC 6.42 CAPM rate of return 14% Risk free rate 5% Net Profit Margin 11% Financial Leverage 0.72x Total Asset Turnover 1.1x Number of shares outstanding 300 000 As Netflicks does not have a long enough financial history, you have estimated additional growth rates below: Year 1 to 3 Year 1 to 8 Year 8 onwards 1.5% 1.3% Growth in earnings and FCFF 1.4% Payout ratio 20% 20% 20% 14% 14% 14% ROE ROIC 16% 16% 16% a) Determine the value per share, using the FCFF model. (12 marks) b) If instead you used the FCFE model, list 2 possible reasons for differences in the final value per share. (2 marks) c) Using the CAPM rate of return, calculate the Present Value of Growth Opportunities (PVGO)