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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

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 annual cash flow by $3.1 million indefinitely. The Current market value of teller is $78 million and that of Penn is $135 million. The appropriate discounting rate for the incremental cash flows is 12%. Penn is trying to decide whether it should offer 40% of its stocks or 94 million in cash to Tellers shareholders. A. What is the cost of each alternative B. What is the NPV of each alternative C. Which alternative should Penn choose

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