$4.$ Toofar Limited is trying to determine the value of Catchme Limited, its target for a takeover. The assets and liabilities of Catchme are as follows:

Assets

Cash and marketable securities

$$120000$

Debtors

$$600000$

Inventory

$$480000$

Long$-$term investments

$$1800000$

Net fixed assets

$$6700000$

$$9700000$

Liabilities

Short$-$term bank loan

$$200000$

Trade creditors

$$900000$

Debentures

$$2000000$

Preference stock

$$2500000$

Owner$$s equity

$$4100000$

$$9700000$

The following information is also made available:

$$ Bad debts are estimated at $5\%$ of debtors and $10\%$ of inventory is obsolete.

$$ The long$-$term investments are made up of $$500000$ in listed securities that have a present market value of $$800000.$ The rest is in an affiliate in which the company expects to receive $$120000$ in dividends next year. The dividends are anticipated to grow at $10\%$ annually for the foreseeable future. The required rate of return of companies in industries that are similar to the affiliate is $20\%.$

$$ The net fixed assets are made up of land, a building and equipment. Land has a book value of $$1000000$ but is now valued at $$2000000.$ The building has a book value of $$3500000$ but has been valued at $$5000000.$ The equipment has a book value of $$2200000$ but the replacement value is $$5000000,$ and the market value is $$1450000.$

$$ Debentures are issued in perpetuity and have a coupon rate of $21\%.$ The current yield is $15\%.$ The par value is $$100,00.$

$$ Preference stock has an annual dividend of $20$ cents. The current price is $105$ cents and the par value is $$1,00.$

Determine the fair value of Catchme Limited.