You are an analyst working in a private equity investment company and have been assigned to cover the sustainable food industry for Unity Fund, a private vehicle investment fund. Your fund is considering the privatisation of Oceania Limited, a public listed company on the local stock exchange. This company currently has 92 million outstanding stock available. Company stock is currently trading at $52.20 per share. Oceania’s financial extract are as listed below:

 

1) You are required to assess the growth rate for Oceanic Limited and have been told that the company has gone into a stable growth phase. Appraise the method you will be using and compute the sustainable growth rate.

2) You have been asked to value the company by using the following methods:

(a) Dividend Model

(b) Free Cash Flow to Equity

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Oceania's financial extract are as listed below: Income Statement (SM) 2019 2020 Revenue 372 422 Depreciation Other Operating Expense Income Before Taxes 12 15 271 298 89 109 Тахes 23 28 Net Income Dividends Earnings per share Dividends per share Common Shares Outstanding 66 20 81 19 0.72 0.88 0.22 0.21 92 92 Balance Sheet (Sm) 2019 2020 Current Assets 334 412 Net Property, Equipment Total Assets Plant and 398 577 732 989 Current Liabilities Long Term Debt Total Liabilities Shareholder Equity Total Liabilities and Equity Capital Expenditure 43 121 43 121 689 868 732 989 42 53 Oceania's financial extract are as listed below: Income Statement (SM) 2019 2020 Revenue 372 422 Depreciation Other Operating Expense Income Before Taxes 12 15 271 298 89 109 Тахes 23 28 Net Income Dividends Earnings per share Dividends per share Common Shares Outstanding 66 20 81 19 0.72 0.88 0.22 0.21 92 92 Balance Sheet (Sm) 2019 2020 Current Assets 334 412 Net Property, Equipment Total Assets Plant and 398 577 732 989 Current Liabilities Long Term Debt Total Liabilities Shareholder Equity Total Liabilities and Equity Capital Expenditure 43 121 43 121 689 868 732 989 42 53

Answer rating: 100% (QA)

1a The method that will be used to measure the growth rate of Oceanic Limited is the Company and investment growth rates This involves the evaluation of the current performance of the company visavis ... View the full answer