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eData Ltd $($eData$)$ is a South African entity with a $30$ September financial yearend. The entity manufactures and distributes electronic products nationwide as well as internationally.Although eData has been generating profits and has indicated strong growth in the past financial years, the industry has become more competitive. A SWOT analysis performed on eData indicated that one of eDatas largest weaknesses is the entitys inability to deliver innovative products compared to the latest products available on the market. After thoroughly discussing the situation and assessing eDatas potential to aid this weakness with internal resources, eDatas directors determined that the best solution would be to acquire an external entity to overcome this gap.eData is considering acquiring KnowNow Ltd $($KnowNow$),$ a South African company that has an excellent reputation for research and development which results in premium products with the latest technological advances. eData is interested in purchasing a $51\%$ controlling share in KnowNow for R$30650000.$ The payments will be made as follows:Date Payment$1$ October $2024$R$214550001$ October $2025$R$9195000$TotalR$30650000$KnowNows current sole owner, Mr$.$ Dylan Wheeler, is concerned that should eData wish to sell its controlling shareholding in the future, the new shareholders vision for KnowNow will not align with Mr$.$ Dylan Wheelers view. Consequently, the acquisition contract will contain a clause that require eData to keep its shareholding up until at least $30$ September $2027.$ Should eData wish to sell its shareholding at that point in time, Mr$.$ Dylan Wheeler must be given the first option to repurchase the shares before they are made available to other parties to purchase.The shareholding will be made available for Mr$.$ Dylan Wheeler to repurchase at a price based on the enterprise value of KnowNow. The enterprise value will be based on the earnings before interest, tax, depreciation and amortisation $($EBITDA$)$ multiplied by $4.$The market value of KnowNows debt on $30$ September $2027$ is expected to be R$7970000.$The following are KnowNows cash flow projections: Notes $2024202520262027$ Actual Forecast Forecast Forecast R$000$ R$000$ R$000$ R$000$Net cash inflow from operating activities$1$ & $220400210752213022897$Net cash outflow from investing activities$(12330)(13147)(14050)(14999)$Net cash inflow$/($outflow$)$ from financing activities$3(5020)(2800)5231404$Movement in cash and cash equivalents$3050512886039302$Opening balance: Cash and cash equivalents$15419184692359732200$Closing balance: Cash and cash equivalents$418469235973220041502$Notes$1.$KnowNows market$-$related gross profit margin at which the entity usually sells its products is $35\%.$ After the acquisition, KnowNow will, however, sell its products to eData at a gross profit margin of $25\%,$ payable on delivery.The forecasted cash flows of KnowNow include the following cash amounts from eData at the $25\%$ agreed gross profit margin: $202520262027$ Forecast Forecast Forecast R$000$ R$000$ R$000$Revenue received from eData$544163007005$Should eData sell its shareholding in KnowNow on $30$ September $2027,$ all transactions between the two parties will again be subject to market$-$related prices and costs$\mathrm{.}2.$The net cash inflow from operating activities, excluding finance cost paid and taxation paid, approximates EBITDA. The following items are included in the net cash flows from operating activities: $2024202520262027$ Actual Forecast Forecast Forecast R$000$ R$000$ R$000$ R$000$Taxation paid$4704498852055460$Finance cost paid$8118027867723.$According to KnowNows dividend policy, all shareholders are paid a dividend of $15\%$ of the actual cash inflows from operating activities. The dividends are declared and paid on $30$ September each year. This policy will be maintained in the foreseeable future. Dividends paid have already been included in the cash flows from financing activities amount$\mathrm{.}4.$Cash to the value of R$32500000$ will be required for operations between $1$ October $2024$ and $28$ September $2027.$Additional informationAn appropriate discount rate is $12\mathrm{.}6\%$ after tax.The South African Income Tax rate applicable to companies is $27\%.$According to the South African Income Tax Act, a capital gains inclusion rate of $80\%$ is applicable to companies.The South African Income Tax Act laws state that local dividends $($South African dividends$)$ are exempt from tax.It is eDatas intention to sell all their shares in KnowNow on $30$ September $2027.$Assume today is $30$ September $2024.$REQUIRED:Assist eData Ltd by determining the current value of the KnowNow Ltd shareholding.Round all figures to two $(2)$ decimals, where applicable.$(27$ marks$)$

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