Problem $26-14$ Calculating NPV $[$LO$3]$

$BQ,$ Incorporated, is considering making an offer to purchase iReport Publications. The

vice president of finance has collected the following information:

$BQ$ also knows that securities analysts expect the earnings and dividends of iReport to

grow at a constant rate of $5$ percent each year. BQ management believes that the

acquisition of iReport will provide the firm with some economies of scale that will

increase this growth rate to $7$ percent per year.

a$.$ What is the value of iReport to BQ$?($Do not round intermediate calculations and

round your answer to $2$ decimal places, e$.$g$.,32\mathrm{.}16.)$

b$.$ What would BQ$\text{'}$s gain be from this acquisition? $($Do not round intermediate

calculations and round your answer to $2$ decimal places, e$.$g$.,32\mathrm{.}16.)$

c$.$ If BQ were to offer $$45$ in cash for each share of iReport, what would the NPV of the

acquisition be$?($Do not round intermediate calculations and round your answer to $2$

decimal places, e$.$g$.,32\mathrm{.}16.)$

d$.$ What's the most BQ should be willing to pay in cash per share for the stock of

iReport? $($Do not round intermediate calculations and round your answer to $2$

decimal places, e$.$g$.,32\mathrm{.}16.)$

e$.$ If $BQ$ were to offer $140,000$ of its shares in exchange for the outstanding stock of

iReport, what would the NPV be$?($Do not round intermediate calculations and round

your answer to $2$ decimal places, e$.$g$.,32\mathrm{.}16.)$