(c) (i) (Appendix 1)
Estimate of future growth rate 1
Exclude interest from free cash flows 1
Estimate of free cash flows 2
Estimate of Foshoro Co’s value 1
Estimate of equity value of Foshoro Co 1
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6
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(ii) (Appendix 2)
Combined company asset beta 1
Combined company equity beta 1
Combined company cost of equity 1
Combined company cost of capital 1
Combined company sales revenue (or operating profits) (years 1 to 4) 1
Combined company taxation amounts (years 1 to 4) 1
Combined company additional asset investment (years 1 to 4) 1
Combined company total value (years 1 to 4) 1
Combined company value after first four years 1
Combined company total market value 1
Combined company market value of equity 1
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11
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(iii) (Discussion in report and appendix 3)
Evaluation of benefit to Chikepe Co shareholders 3–4
Discussion of the limitations of the valuation method used 4
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Max 7
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Professional marks for part (c)
Report format 1
Structure and presentation of the report 3
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4