A Corporation is buying B Corporation using a mix of cash and shares. They will be paying $3M in cash, and the remainder in equity in the merged firm. A Corporation currently has a market value of $85M, and B Corporation has a market value of $11M. Purchasing B Corporation will allow A Corporation to do a project with no upfront costs that will produce an EBIT of $700,000 each year for the foreseeable future, and will also produce a single lump sum cash flow of $2.5M ten years from today. The tax rate is 32% and the riskless rate is 2%. B Corporation is 60% debt-financed and 40% equity financed, has an unlevered cost of equity of 8%, and a cost of debt of 5%.

a) What is B Corporation's weighted average cost of capital?

b) What is the NPV of the synergies of this merger?

c) What price should A Corporation pay for B Corporation if they are willing to offer B Corporation's shareholders half of the synergies?

d) How many shares should A Corporation offer B Corporation's shareholders in payment, taking into account the $3M in cash they are paying?