1)You are an investment analyst at FI Investments tasked to value FBC firm a Southern Agricultural Conglomerate. The following financial information was recently released for FBC. The company’s 2018 and 2017 annual financial reports are contained in tables 1 and 2 below, along with important additional information: Table 1: FBC statement of financial position (R millions) see attached table1 Additional information: Depreciation (2018): R483. The firm spent R250m in profitable projects during the course of 2018 WACC : 15% Cost of equity of the firm: 10% Tax rate : 40% Table 2: FBC statement of comprehensive income (R millions except for share data) 2018 2017 Total revenues R3 175 R3 075 EBIT 495 448 Interest expense 104 101 Net Income 235 208 Dividends per share R0.80 R0.80 Use the information given, to answer the following: 1.1)You are told that the Free Cash Flow to Equity (FCFE) of the firm will continue to grow at a rate of 5% for the next 3 years, after which it will stabilize to a rate of 3%. Calculate the intrinsic value of each of FBC’ shares. 9 (Use 2.d.p in your calculations & final answer for this question)
1)You are an investment analyst at FI Investments tasked to value FBC firm a Southern Agricultural Conglomerate. The following financial information was recently released for FBC. The company’s 2018 and 2017 annual financial reports are contained in tables 1 and 2 below, along with important additional information:
Table 1: FBC
see attached table1
Additional information:
The firm spent R250m in profitable projects during the course of 2018
WACC : 15%
Tax rate : 40%
Table 2: FBC statement of comprehensive income
(R millions except for share data)
|
|
2018 |
2017 |
|
Total revenues |
R3 175 |
R3 075 |
|
EBIT |
495 |
448 |
|
Interest expense |
104 |
101 |
|
Net Income |
235 |
208 |
|
Dividends per share |
R0.80 |
R0.80 |
Use the information given, to answer the following:
1.1)You are told that the
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