Penn Corp. is analyzing the possible acquisition of Teller Company. Both firms have no debt. Both are construction and building material companies. Penn believes the acquisition will increase its total after-tax annual cash flows by $4.05 million indefinitely. Acquisition proposal involves is acquiring 100% of Teller Company. Penn is evaluating two alternative payment methods: (a) cash offer price of $6.50 per Teller share; (b) share exchange (script) offer of 0.50 of Penn shares for each share of Teller. After acquisition Peen will have an appropriate discount rate of 10% per annum. The pre-acquisition financial information of two companies are given bellow.

	Teller Corp.	Penn Corp.
Earnings after tax	$8,000,000	$15,200,000
Issued shares	17,500,000	22,782,000
EPS (prior to announcement)	$0.46	$0.67
P/E ratio (Prior to announcement)	13	19
Market value	$104,000,000.00	$228,800,000.00

Calculate the gain from acquisition under:

(a) Cash offer for both Penn and Teller

(b) Stock offer for both Penn and Teller