$($b$)$ Astro Bhd$.$ is considering making an offer to purchase PrimeMedia Bhd$.$ The Chief

Financial Officer of the company has collected the following information:

Astro Bhd$.$ also knows that securities analysts expect the earnings and dividends of

PrimeMedia Bhd$.$ to grow at a constant rate of $5\%$ each year. Astro Bhd$.$

management believes that the acquisition of PrimeMedia Bhd$.$ will provide the firm

with some economics of scale that will increase this growth rate to $7\%$ per year. With

the new growth rate, the price per share for PrimeMedia Bhd$.$ will be RM$30\mathrm{.}68.$

Answer the following questions:

$($i$)$ What is the value of PrimeMedia Bhd$.$ to Astro Bhd$.?$

$($ii$)$ What would Astro Bhd$\text{'}$s gain be from this acquisition?

$($iii$)$ What is the NPV of the acquisition if Astro Bhd$.$ were to offer RM$18$ in cash

for each share of PrimeMedia Bhd$?$

$(2$ marks$)$

$($iv$)$ What is the most Astro Bhd$.$ should be willing to pay for the stock of

PrimeMedia Bhd$.?$

$(2$ marks$)$

$($v$)$ What is the NPV if Astro Bhd$.$ were to offer $200,000$ of its shares in exchange

for the outstanding stock of PrimeMedia Bhd$?$

$(4$ marks$)$

$($vi$)$ Should the acquisition be attempted? If yes, should it be as in $($iii$)$ or $($v$)?$

$(2$ marks$)$