Tel Tech, a software company reported revenues £2 million and net income of £300,000 for the latest year. Depreciation and amortization amounted to £50,000. The firm's net operating cash flows are expected to grow at 5% per annum for the next two years and will remain constant thereafter. The firm's annual capital expenditure will remain constant £50,000.

The firm does not expect any increase in working capital requirements. The firm is financed by 60% debt and 40% equity. Risk free rate is 1.5%, default spread 2% and cost of equity is 5%.  Tax rate is 20%.The non-operating assets at the end of the year amount to £150000.
REQUIRED:
1) Estimate the free cash flows to the firm for the latest year. 
2) Estimate the discount rate to be used in firm valuation.
3) Estimate the value of the firm.