Using the information below, answer questions 1 4.

Grand Park is considering acquiring Retro Poll. Retro Polls expected net cash flows for the first 3 years of the post-merger period are $3 million in year 1, $3.2 million in year 2, and $3.7 million in year 3. After 3 years, the net cash flows are expected to grow at a constant rate of 5% per year. The appropriate discount rate for these cash flows is 13%. Retro Poll has $12 million in debt and 2 million shares outstanding each priced at $11 in the market.

1. What is Retro Polls terminal value?

A. $38.56

B. $48.56

C. $58.56

D. $68.56

2. What is Retro Polls value of equity to Grand Park?

A. $29.38

B. $35.38

C. $39.38

D. $45.38

3. What is the value of Retro Polls stock price to Grand Park?

A. $11.69

B. $12.69

C. $13.69

D. $14.69

4. Determine the merge premium if the offer price is $12.85.

A. 13.82%

B. 14.82%

C. 15.82%

D. 16.82%