Magiclean Corporation is considering the acquisition of Dustvac Company. Dustvac has a capital structure consisting of $7.5 million (market value) of 11% bonds and $15 million (market value) of common stock. Dustvac's pre-merger beta is 1.36. Magiclean's beta is 1.02, and both it and Dustvac face a 40% tax rate. Magiclean's capital structure is 40% debt and 60% equity. The free cash flows from Dustvac are estimated to be $4.5 million for each of the next 4 years and a horizon value of $15 million in Year 4. Tax savings are estimated to be $1.5 million for each of the next 4 years and a horizon value of $7.5 million in Year 4. New debt would be issued to finance the acquisition and retire the old debt, and this new debt would have an interest rate of 8%. Currently, the risk-free rate is 6.0% and the market risk premium is 4.0%. a. b. C. What Dustvac's pre-merger WACC? What discount rate should you use to discount Dustvac's free cash flows and interest tax savings? What is the value of Dustvac's equity to Magiclean? (Round your answer to the closest thousand dollars.)