Answer Happy

BQ, Incorporated, is considering making an offer to purchaseiReport Publications. The vice president of finance has collectedthe following information: BQ iReport Price-earnings ratio 15.2 9Shares outstanding 1,100,000 160,000 Earnings $ 4,200,000 $ 660,000Dividends $ 920,000 $ 370,000 BQ also knows that securitiesanalysts expect the earnings and dividends of iReport to grow at aconstant rate of 4 percent each year. BQ management believes thatthe acquisition of iReport will provide the firm with someeconomies of scale that will increase this growth rate to 6 percentper year. a. What is the value of iReport to BQ? (Do not roundintermediate calculations and round your answer to 2 decimalplaces, e.g., 32.16.) b. What would BQ’s gain be from thisacquisition? (Do not round intermediate calculations and round youranswer to 2 decimal places, e.g., 32.16.) c. If BQ were to offer$40 in cash for each share of iReport, what would the NPV of theacquisition be? (Do not round intermediate calculations and roundyour answer to 2 decimal places, e.g., 32.16.) d. What’s the mostBQ should be willing to pay in cash per share for the stock ofiReport? (Do not round intermediate calculations and round youranswer to 2 decimal places, e.g., 32.16.) e. If BQ were to offer140,000 of its shares in exchange for the outstanding stock ofiReport, what would the NPV be? (Do not round intermediatecalculations and round your answer to 2 decimal places, e.g.,32.16.)
What is the value of iReport to BQ now? (Do notround intermediate calculations and round your answer to 2 decimalplaces, e.g., 32.16.)