Penn Corp. is analyzing the possible acquisition of Teller Company. Both firms have no debt. Penn believes the acquisition will increase its total after-tax annul 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 Tellers shareholders.

b. What is the NPV of each alternative to the acquirer?