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. 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 $45 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? a. 12.64% b. 12.85% c. 13.23% d. l3.57% e. 13.91% Simpson Inc. is considering a vertical merger with The Lachey Company. Simpson currently has a required return of 11%, while Lachey's required return is 15%. The market risk premium is 5% and the risk - free rate is 5%. Assume the market is in equilibrium. If Simpson is going to make up 2/3 of the new firm (and Lachey will comprise the remaining 1/3), what will be the beta of the new merged firm? a. 1.47 b. 1.61 c. 1.79 d. 1.93 e. 2.05