Cigno co.

Multiplying by 1/0.03 would be discounting at 3%.

We need to discount by 9% and there is growth of 3%.

To discount an inflating perpetuity we use the dividend growth formula (it can be used for any inflating perpetuity). In the formula, Do = 2103; g = 0.03; and re = 0.09

However this would give the PV now if the first flow was in 1 years time. Here the first flow is in 5 years time which is 4 years later, so the answer from the formula gives a PV four years later – i.e. time 4. Therefore we need to discount for 4 years at 9% (either using the tables or using first principles as the examiners answer has done)

But it has been added!

As is written in the answer “Value attributable to Cigno Co’s shareholders from the acquisition of Anatra Co after taking into account the cash benefits of potential tax savings and redundancies = $5,609m”

5,609 = 5,481 + 128

I don’t know why you say it has been deducted, because (as I wrote in my previous answer) it has not been deducted.

The total benefit is 5609 which is the total of the 128 benefit and the 5481 benefit (just as you wrote should be the case in your first question).