QUESTION ONE Ibajane PLC is planning to make a bid for the entire share capital of Luano PLC, a company operating in the same industry of honey processing. Ibajane PLC is expected that a bid of K75, 000 of the entire share capital of Luano PLC will be successful and most likely to be approved by the regulators. The acquisition of Luano PLC will increase Ibajane PLCs after tax operating cash flows over the next few years by: Year 1 K35, 600 Year 2 K37, 400 Year 3 K38, 300 Year 4 K39, 100 Luano PLC has K15, 000 par value of 5.75% irredeemable debenture trading at par. Luano PLC has an equity beta of 1.941, Zambias sovereign Eurobond yield is 8% and the average market return on Lusaka Stock Exchange (LUSE) is 10%. The corporation tax is at 30%. Far importantly, Ibajane PLC always discount cash flows using the weighted average cost of capital. REQUIRED: a) Evaluate whether the acquisition of Luano PLC will add value to Ibajane PLC?