4. Merger valuation and discounted cash flows When a merger takes place between two companies to form a single firm, the target company to operate as a separate identity. Consider the following scenario: Water and Power Co. (W\&P) is considering an acquisition of Thatherton Fuels., and estimates that acquiring Thatherton will result in incremental after-tax net cash flows in years 13 of $20 million, $30 million, and $36 million, respectively. After the first three years, the incremental cash flows contributed by the Thatherton acquisition are expected to grow at a constant rate of 3% per year. W\&P's current beta is 0.80 , but its post-merger beta is expected to be 1.04 . The risk-free rate is 5%, and the market risk premium is 7.10%. Based on this information, complete the following table by selecting the appropriate values. (Note: Round your intermediate calculations to two decimal places.) Thatherton Fuels has 4 million shares of common stock outstanding. What is the largest tender offer Water and Power Co. (W\&P) should make on each of Thatherton Fuels' shares? $103.63$86.36$103.64$69.09