Apilado Appliance Corporation is considering a merger with the Vaccaro Vacuum Company. Vaccaro is a publicly traded company, and its current beta is 1.40. Vaccaro has been barely profitable, so it has paid an average of only 20% in taxes during the last several years. In addition, it uses little debt, having a debt ratio of just 30%.

If the acquisition were made, Apilado would operate Vaccaro as a separate, wholly owned subsidiary. Apilado would pay taxes on a consolidated basis, and the tax rate would therefore increase to 35%. Apilado also would increase the debt capitalization in the Vaccaro subsidiary to 45% of assets, which would increase its beta to 1.69. Apilado's acquisition department estimates that Vaccaro, if acquired, would produce the following net cash flows to Apilado's shareholders (in millions of dollars):

Year	Net Cash Flows
1	$1.30
2	$1.50
3	$1.75
4	$2.00
5 and beyond	Constant growth at 5%

These cash flows include all acquisition effects. Apilado's cost of equity is 13%, its beta is 1.0, and its cost of debt is 9%. The risk-free rate is 5%.

1. What discount rate should be used to discount the estimated cash flows? (Hint: Use Apilado's r_s to determine the market risk premium.) Round your answer to two decimal places. %
2. What is the dollar value of Vaccaro to Apilado? Round your answer to two decimal places. Enter your answer in millions. For example, an answer of $13,000,000 should be entered as 13. $ million
3. Vaccaro has 1.1 million common shares outstanding. What is the maximum price per share that Apilado should offer for Vaccaro? Round your answer to the nearest cent. $