Question.2 (Show calculations+Formulas & No Excel)

Kebla is evaluating the viability of going public but is unsure of a fair price for the company. The company would like to make its estimate of the companys common stock and data has been collected to perform the valuation using the free cash flow valuation model.

The companys weighted average cost of capital is 12 percent and it has R1,600,000 of debt at market value and R600,000 of preferred stock at its assumed market value. The estimated free cash flows over the next five years, 2019 through 2023, are given below. It is envisaged that the free cash flow will grow at 4 percent annually for the foreseeable future beyond 2023.

year (t)	Free Cash Flow (FCF)
2019	230,000
2020	270,000
2021	300,000
2022	350,000
2023	400,000

Required:

2.1. Estimate the value of Keblas entire company using the free cash flow approach. [5]

2.2. Using your finding in 7.1 along with data provided above, determine Keblas common stock value. [5]

2.3. If the company plans to issue 240,000 share of common stock, what is it estimated value per share? [5]