Part (i) was generally done quite well. Most candidates were able to present adequate free cash flows to firm figures both for the target and the combined company. However, common errors included: putting interest in the cash flows, which is incorrect as it is imputed in the WACC; making errors in the growth rate of sales revenue which needed to be estimated over a period of three years, not four; and errors in determining a suitable discount rate for the combined company using asset betas and combining these.