Penn Corp. Is analyzing the possible acquisition of Teller Company. Both firms have no

debt. Penn believes the acquisition will increase its total aftertax annual cash flow by $$3$

million Indefinitely. The current market value of Teller is $$48$ million and that of Penn is

$$90$ million. The approprlate discount rate for the incremental cash flows is $10$ percent.

Penn is trying to decide whether it should offer $45$ percent of its stock or $$73$ million in

cash to Teller's shareholders.

a$.$ What is the cost of each alternatlve? $($Do not round Intermedlate calculations and

enter your answers in dollars, not millions of dollars, rounded to the nearest whole

number, e$.$g$.,1,234,567.)$

b$.$ What is the NPV of each alternative? $($Do not round Intermedlate calculations and

enter your answers in dollars, not millions of dollars, rounded to the nearest whole

number, e$.$g$.,1,234,567.)$

c$.$ Which alternative should Penn choose?

Cash

Stock