the following table gives the info on 2 companies for the year just ended:

Sport unlimite (SU) Fast Track (FT)

Net earnings 5000000 1500000

number of shares 3 million 1,5 million

price 18$/share 15$/share

su thinking of acquiring ft with a mix offer of both cash and share swap

su estimates if acquisition go ahead net earnings will grow by 6 % instead of 2% if they operate independent and such growth rates are perpetual. SU has a cost of capital of 12%

SU would like to make an offer not to exceed 65% of the total synergy.

What is the total synergy in PV terms?

a)48.5M b)50.5M c)45.5M d)47.5M e)52.5M

What is the amount of the premium offered to FT expressed as a percentage?

a)50% b)40% c)55% d)45% e)35%

If the offer is made with 40% cash and 60% share swap what is the value of the share swap?

a)21.9M b)19.5M c)20.5M d)17.9M e)18.9M