Anacott Steel is acquiring Terafly Incorporated. Terafly is expected to provide Anacott with operating cash flows of $12, $21, $16, and $9 million over the next four years, respectively. In addition, the terminal value of all remaining cash flows at the end of Year 4 is estimated at $18 million. The merger will cost Anacott $40.0 million today. If the value of the merger is estimated at $9.00 per share and Anacott has 1,000,000 shares outstanding, what equity discount rate must the firm be using to value this acquisition? 1. 17.92% 2. 16.49% 3. 17.20% 4. 14.16% 5. 21.15%