a) Shannon Corporation is considering acquiring Dalton Company for $ 100,000 in cash. Dalton's cost of capital is 16%. Based on market analysis, a targeted cost of capital for Dalton is 12%. Shannon has estimated that Dalton can generate $ 9,000 of free cash flows over the next 6 years (Hint: The annuity of cash flows may be used). Using Net Present Value, should Shannon acquire Dalton?

(b) On Tuesday, December 8, Hometown Power Co.s board of directors declares a dividend of 75 cents per share payable on Wednesday, January 17, to shareholders of record as of Wednesday, January 3. When is the ex-dividend date? If a shareholder buys stock before that date, who gets the dividends on those shares: the buyer or the seller? Hint: January 1 is the holiday for new year.