American Hardware, a national hardware chain, is considering purchasing a smaller chain, Eastern Hardware. American's analysts project that the merger will result in incremental net cash flows with a present value of $72.52 million, and they have determined that the appropriate discount rate for valuing Eastern is 16%. Eastern has 4 million shares outstanding. Eastern's current price is $16.25. What is the maximum price per share that American should offer? a. $16.25 b. $16.97 c. $17.42 d. $18.13 e. $19.00 American Pizza, a national pizza chain, is considering purchasing a smaller chain, Eastern Pizza. American's analysts project that the merger will result in incremental net cash flows of $2 million in Year 1, $4 million in Year 2, $5 million in Year 3, and $117 million in Year 4. (The Year 4 cash flow includes a terminal value of $107 million.)The acquisition would be made immediately, if it is undertaken. Eastern's post-merger beta is estimated to be 2.0, and its post-merger tax rate would be 34%. The risk-free rate is 8%, and the market risk premium is 4%. What is the appropriate discount rate for valuing the acquisition? a. 179% b. 16% c. 15% d. 14% e. 12%