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Estimated premium required to acquire Fodder Co = 0.25 × 36,086,000 = $9,022,000
Pls tell from where 36086000 came from , also premium is calculated on Ve right?
There is no question called Pursuit in the June 2012 exam. Are you sure you have the date correct?
The value of the firm (equity plus debt) is the PV of the free cash flows discounted at the WACC, and is 40,095.
From the question, the equity is 90% of the total firm value and so is 90% x 40,095 = 36,086.
The question also says that the payment will be the equity value plus 25%, so the premium payable on the equity value is 25% x 36,086
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