Drop down choices:

Post-merger cost of equity: 13.39%, 12.24%, 9.80%, or 10.22%

Projected value of the cash flows at the end of three years: $286.17 million, $167.68 million, $259.62 million, or $275.16 million

The value of Thatherton Fuels contribution to Spentworth Industries Corp: $179.84 million, $269.76 million, $292.24 million, or $224.80 million

to operate as a separate When a merger takes place between two companies to form a single firm, the target company does not continue identity. Consider the following scenario: Spentworth Industries Corp. is considering an acquisition of Thatherton Fuels., and estimates that acquiring Thatherton will result in incremental after-tax net cash flows in years 1-3 of $9 million, $13.5 million, and $16.2 million, respectively. After the first three years, the incremental cash flows contributed by the Thatherton acquisition are expected to grow at a constant rate of 6% per year. Spentworth's current beta is 1.20, but its post-merger beta is expected to be 1.56. The risk-free rate is 3.5%, and the market risk premium is 5.60%. Based on this information, complete the following table by selecting the appropriate values. (Note: Round your intermediate calculations to two decimal places.) Value Post-merger cost of equity Projected value of the cash flows at the end of three years The value of Thatherton Fuels' contribution to Spentworth Industries Corp. Thatherton Fuels has 4 million shares of common stock outstanding. What is the largest tender offer Spentworth Industries Corp. should make on each of Thatherton Fuels' shares? $56.20 $44.96 $67.44