Part (c) then asked the percentage premium payable under each of three payment methods. Again the answers to this were disappointing, and again surprisingly so, because it is an area that has been tested recently. Some reasonable answers were provided for the cash only and the cash and shares methods of payment.

The bond payment method was done less well. A common but minor error was not to provide the answer as a percentage, although this is clearly asked for in the requirements. And few answers justified the payment method that Strand Co’s shareholders (the target company’s shareholders) would prefer.