Disaster Airlines is a firm in severe financial distress. The firm can no longer pay its bills on time and it is far behind on payments to its banks and long-term debt holders. The firm has decided to either be purchased by another air carrier or liquidate its assets and close. The managers have approached Altruistic Airlines about being acquired. After examining Disasters financial statements, looking at the routes owned by Disaster, and looking at the condition of the fixed assets, Altruistic Airlines has offered to pay the stockholders of Disaster Airlines $8 million to be acquired. Disaster Airlines covers flights to both areas in which Altruistic already flies, but also has routes in areas into which Altruistic is interested in expanding. As part of the analysis, Altruistic determined that the additional cash flows resulting from the acquisition would total $500,000 this year (Year One) and would grow at a rate of 4% for the next three years. After this time, the cash flows would grow at a constant rate of 2% annually for the foreseeable future. The weighted average cost of capital (WACC) of Altruistic Airlines would be 8% after the merger.

If, instead, Disaster Airlines decides to liquidate its assets, it will pay off its debt and give any remaining funds to the firms stockholders. Disaster Airlines balance sheet is attached. The Accrued Wages were earned within the last 90 days prior to filing for bankruptcy. The Unpaid Employee Benefits were due in the six months prior to the filing for bankruptcy. The Unsecured Customer Deposits are for less than $900 each. Disaster Airlines has no property taxes past due. The First Mortgage is secured against the fixed assets of the firm. The Subordinate Debentures are subordinate to the Notes Payable to Banks. The liquidation of the firms Current Assets would produce $186,000; liquidation of the firms fixed assets would produce $800,000. This totals to $986,000 in funds to distribute to the creditors and stockholders of the firm. The trustee expenses associated with the bankruptcy totaled $50,000 and unpaid expenses incurred after the filing of the bankruptcy petition, but before the trustee was appointed totaled $10,000.

Answer the following questions.

1. Given the information provided in the case study above and using the Corporatw Value Model, calculate the maximum value (in millions of dollars) that Altruistic Airlines should pay for Disaster Airlines stock.

I only need this cash flow question answered, and therefore, it does not require the balance sheet.