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Calculate the continuing value of equity

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Question - Below are the extracts from the reformulated financial statements of Tara Ltd for the financial year ended 31 July 2021: -

2021 2020

£'000 £'000

Operating assets 12,300 9,020

Operating liabilities 5,750 4,300

Financial assets 480 920

Financial liabilities 5,970 4,680

Operating profit after taxation 370

Net financial expense after taxation 120

During the financial year ended 31 July 2021, Tara Ltd paid a dividend of £150,000 and there was no issue or repurchase of shares. The dividend is expected to grow by 2% in 2022 and by 3% in 2023 indefinitely. The cost of equity capital is 6%.

Tara Ltd incurred negative free cash flow for the financial year ended 31 July 2021 due to few ongoing huge investment programmes.

Required - Calculate the Continuing value (CV) of equity as at 31 July 2021 to be used in the dividend discount model.

Reference no: EM133149663

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