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Please, can you help clarify why the examiner’s answer still included the $100m exit income as an inflow for 2tel if it WON the license( through buying T-Me)?
The scenario in the question (Paragraph 2 under Licensing arrangements in TFS), states that $100m exit fee will be paid to any company that LOST the license.
The examiner’s assumption is to assume “exit at the end of the licence period and that the exit income is still at current levels”. I do not understand this at all.
Sorry, but I can’t see a good reason for that assumption in the “Buy T-Me and gain” calculation. However, it has been recognised as an assumption so presumably it could have been left out.
Sir, why did the solution took in to account only 2 years of income while acquiring the company when in fact there were 3 years left to the bid. Does it see first year as no profit/no loss?
3rd para before the end: “2Tel is particularly interested……final twomyears of the contract”.