BQ, Incorporated, is considering making an offer to purchase iReport Publications. The vice president of finance has collected the following information:

	BQ	iReport
Price-earnings ratio	15.5	8.8
Shares outstanding	1,300,000	170,000
Earnings	$ 4,400,000	$ 670,000
Dividends	$ 940,000	$ 390,000

BQ also knows that securities analysts expect the earnings and dividends of iReport to grow at a constant rate of 6 percent each year. BQ management believes that the acquisition of iReport will provide the firm with some economies of scale that will increase this growth rate to 8 percent per year.

BQs outside financial consultants think that the 8 percent growth rate is too optimistic and a 7 percent rate is more realistic.

f-1.	What is the value of iReport to BQ now?

f-2.	What would BQs gain be from this acquisition?

f-3.	If BQ were to offer $38 in cash for each share of iReport, what would the NPV of the acquisition be

f-4.	Whats the most BQ should be willing to pay in cash per share for the stock of iReport?

f-5.	If BQ were to offer 160,000 of its shares in exchange for the outstanding stock of iReport, what would the NPV be?