Grand Park is considering acquiring Retro Poll. Retro Polls expected net cash flows for the first 3 years of the post-merger period are $3 million in year 1, $3.2 million in year 2, and $3.7 million in year 3. After 3 years, the net cash flows are expected to grow at a constant rate of 5% per year. The appropriate discount rate for these cash flows is 13%. Retro Poll has $12 million in debt and 2 million shares outstanding each priced at $11 in the market.

What is Retro Polls terminal value?

$38.56

$48.56

$58.56

$68.56

What is Retro Polls value of equity to Grand Park?

$29.38

$35.38

$39.38

$45.38

What is the value of Retro Polls stock price to Grand Park?

$11.69

$12.69

$13.69

$14.69

Determine the merge premium if the offer price is $12.85.

13.82%

14.82%

15.82%

16.82%