Chatham Foods, with 1 million shares outstanding, wishes to merge with Kent drinks with 2.5 million shares outstanding. The market prices for Chatham foods and Kent drinks are $49 and $18 respectively. The merger could create an estimated savings of $800,000 annually for the indefinite future. If Chatham foods were willing to pay $25 per share for Kent drinks and the appropriate cost of capital is 14%, What is the NPV of the offer?

a) -$11,785,714 (CORRECT ANSWER)

b) -$20,250,000

c) -$16,751,887

d) -$18,425,000