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Use the following information to answer question 31 to 33. An analyst covering...
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Use the following information to answer question 31 to 33.
An analyst covering Limpopo Ltd has compiled the following data (in hundreds of millions of rands) for the financial year ended 31 December 2024, in preparing for further analysis. This analysis will be included in a report she has been asked to produce. Limpopo Ltd is financed through a combination of preference shares, bonds, and equity.
Security type | Market value | Required rate of return |
Preference shares | R300 | 6% |
Bonds | R1000 | 10% |
Shares | R700 | 14% |
Total | R2000 |
|
Preference share dividends R50
Net income available to common shareholders R320
Increase in investment in working capital R60
Increase in investment in fixed capital R120
Net borrowing R90
Income resulting from reversal of restructuring charges R25
Depreciation R140
Interest expense R100
Tax rate 30%
Long-term growth rate of FCFF 3%
Long-term growth rate of FCFE 4%
The total value of Limpopo Ltd, using a single stage FCFF model, is closest to: