Consider the following scenario:

Ziffy Corp. is considering an acquisition of Keedsler Motors Co., and estimates that acquiring Keedsler will result in incremental after-tax net cash flows in years 13 of $8.00 million, $12.00 million, and $14.40 million, respectively.

After the first three years, the incremental cash flows contributed by the Keedsler acquisition are expected to grow at a constant rate of 3% per year. Ziffys current beta is 1.60, but its post-merger beta is expected to be 2.08. The risk-free rate is 5%, and the market risk premium is 7.10%.

Based on this information, complete the following table by selecting the appropriate values (Note: Do not round intermediate calculations, but round your answers to two decimal places):

	Value
Post-merger cost of equity	19.7680%
Projected value of the cash flows at the end of three years	$88.4542 million
The value of Keedsler Motors Co.s contribution to Ziffy Corp.

Keedsler Motors Co. has 3 million shares of common stock outstanding. What is the largest tender offer Ziffy Corp. should make on each of Keedsler Motors Co.s shares?

$29.97

$19.98

$24.97

$29.96