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Using the above information, perform a valuation of NOG (Pty) Ltds equity by using the free cash flow technique

Namibia Outdoor Gear (Pty) Ltd (NOG) is a company which manufactures a variety of camping equipment. Namibia Wildemess Adventurers Limited ("NWA') is a listed company on the Namibian Stock Exchange interested in acquiring NOG. NWA has recently asked NOG to stake a price that they will be willing to sell the company. Since NOG Is private company, a valuation has to perform. Your group has been hired to help NOG determine their price. The following information has been provided: The extract from the statement of financial position on 28 February 2020 was as follows: N$000 ASSETS Non-current assets Property 33 ODO Plant and equipment 18 000 51 ODO Current assets Inventory 2 000 Debtors 4 000 Cash and cash equivalents 2 000 8 000 59 000 Total assets EQUITY AND LIABILITIES Share capital (NS1 par) Non-distributable reserve Retained income Ordinary shareholders equity Non-current liabilities 9% Preference shares Debentures 14 ODO 2 000 3 ODO 19 000 16 000 20 ODO 36 000 Current abilities Creditors 4 000 Total equlty and lates 59 000 The following is an extract from the statement of comprehensive income of NOG (Pty) Ltd for the past year ending 28 February 2020 as well as a forecast for the next three years: Actual 2020 N$000 23 310 Budgeted 2021 2022 N$000 N$000 32 100 37 330 2023 N$000 43 900 Income Less: Operating costs Depreciation 6 993 3 717 12 182 4 490 13 792 4 490 15 729 4 490 Profit before interest and tax 12 600 15 428 19 048 23 681 Interest (debentures) 2 500 2 500 2 500 2 500 Profit before tax 10 100 12 928 16 548 21 181 Tax 2101 2 689 3442 4406 Profit after tax 7 999 10 239 13 106 16 776 Further information: The preference share duidend is currently NS1 440 000 and the management of NOG (Pty) Lid has indicated that the current duidend pay-out ratio will be maintained in the future. Growth in after-tax earnings for 2024 and thereafter is expected to be 5% per annum. Depreciation will fluctuate, but for the purposes of the valuation, assume the 2023 charge will continue indefinitely. The NAMRA acknowledges NOG's depreciation pollcy. You can assume that NOG annualy Invests the same amount as the depreciation charge in order to maintain and replace current assets. The current tax rate is 28% and this is expected to remain constant in the foreseeable future Debentures and preference shares are not redeemable and Investors in the market can eam 14% and 10% respectively on these investments. The cost of equity of NOG (Pty) Ltd is 19.5% while the weighted average cost of capital is 16% Namibia Outdoor Gear (Pty) Ltd (NOG) is a company which manufactures a variety of camping equipment. Namibia Wildemess Adventurers Limited ("NWA') is a listed company on the Namibian Stock Exchange interested in acquiring NOG. NWA has recently asked NOG to stake a price that they will be willing to sell the company. Since NOG Is private company, a valuation has to perform. Your group has been hired to help NOG determine their price. The following information has been provided: The extract from the statement of financial position on 28 February 2020 was as follows: N$000 ASSETS Non-current assets Property 33 ODO Plant and equipment 18 000 51 ODO Current assets Inventory 2 000 Debtors 4 000 Cash and cash equivalents 2 000 8 000 59 000 Total assets EQUITY AND LIABILITIES Share capital (NS1 par) Non-distributable reserve Retained income Ordinary shareholders equity Non-current liabilities 9% Preference shares Debentures 14 ODO 2 000 3 ODO 19 000 16 000 20 ODO 36 000 Current abilities Creditors 4 000 Total equlty and lates 59 000 The following is an extract from the statement of comprehensive income of NOG (Pty) Ltd for the past year ending 28 February 2020 as well as a forecast for the next three years: Actual 2020 N$000 23 310 Budgeted 2021 2022 N$000 N$000 32 100 37 330 2023 N$000 43 900 Income Less: Operating costs Depreciation 6 993 3 717 12 182 4 490 13 792 4 490 15 729 4 490 Profit before interest and tax 12 600 15 428 19 048 23 681 Interest (debentures) 2 500 2 500 2 500 2 500 Profit before tax 10 100 12 928 16 548 21 181 Tax 2101 2 689 3442 4406 Profit after tax 7 999 10 239 13 106 16 776 Further information: The preference share duidend is currently NS1 440 000 and the management of NOG (Pty) Lid has indicated that the current duidend pay-out ratio will be maintained in the future. Growth in after-tax earnings for 2024 and thereafter is expected to be 5% per annum. Depreciation will fluctuate, but for the purposes of the valuation, assume the 2023 charge will continue indefinitely. The NAMRA acknowledges NOG's depreciation pollcy. You can assume that NOG annualy Invests the same amount as the depreciation charge in order to maintain and replace current assets. The current tax rate is 28% and this is expected to remain constant in the foreseeable future Debentures and preference shares are not redeemable and Investors in the market can eam 14% and 10% respectively on these investments. The cost of equity of NOG (Pty) Ltd is 19.5% while the weighted average cost of capital is 16%

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