Contingent consideration in goodwill

Hi,

Below is the question

On 1 January 20X7, Banana Co acquired an 80% equity interest in Grape Co. The following is a summary of Grape Co’s equity at the date.

Equity share capital ($1 each) 20

Other components of equity 8

Retained earnings 42

Total 70

The 10 million of Banana Co’s shares which had a nominal value of St each and a market price of $6.80 each , cash of $18 million was due to be paid on 1 20X9 if the net profit after tax of Grape Co grew by 5% in each of the two years following . The present value of the total contingent at 1 20X7 was $16 million. It was felt that there was a 25% chance of the profit target being met. At acquisition, the only to the net assets of Grape Co was for land which had a fair value $5 million higher than its carrying . This is not within the $70 million equity of Grape Co at 1 January 20X7.

Consolidated goodwill:

Share consideration 68
Add NCI 14
Less net assets at acquisition (70)
Goodwill at acquisition 12

The financial director did not take into account the contingent cash since it was not probable would be paid. , he measured the interest using the proportionate of net assets despite the group having a published policy to interest at fair value. The share price of Grape Co at acquisition was $4.25 and should be used to value the NCI.

Sir, can you explain the calculation of contingent consideration in the question? According to the answer, we are supposed to take 25% of 16, why is that so?

Thanks in advance!