VERA Ltd is considering taking over KORU Ltd. VERA and KORU have 4 million and 5 million shares outstanding respectively. The annual net cash flows of VERA and KORU are $1.5million and $2million respectively. These cash flows are expected to remain constant in perpetaby Both companies are ab-equity firms. The risk free rate is 5%. VERA has a beta of 1.2 and a cost of capital of 13 40% while KORU's bota is 14 After the takeover, VERA's annual cash flow is expected to increase to 12 2m per annum in perpetulty and its beta will be 14, while KORU's perpetual cash flow reduces to $1.7m par annum and bets remains the same after the lakeover. a) What is the total gain, in present value term, from the takeover? (2 marks) b) What is the price per share at which KORU represents a zero nel present value investment to VERA? (2 marks] c) II VERA offers $14million in cash for KORU, calculate the gains to shareholders of both companies (2 mark) d) If the deal is settled with VERA swapping 7 VERA shar