Penn Corp. is analyzing the possible acquisition of Teller Company. Both firms have no debt. Penn belives the acquisition will increase its total aftertax annual cash flow by $1.3 million indefinitely. The current market value of Teller is $27 million, and that of Penn is $62 million. The appropriate discount rate for the incremental cash flow is 11 percent. Penn is trying to decide whether it should offer 35 percent of its stock or $37 million in cash to Teller's shareholders. What is the NPV of a Stock Offer and a Cash Offer?

Stock Offer Choices

A. $3,531,818

B. $3,478,212

C. $3,728,414

D. $3,812,412

Cash Offer Choices

A.

$2,218,231

B.

$1,324,768

C.

$2,970,176

D.

$1,818,182