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 flows by $$1\mathrm{.}45$ million indefinitely. The current market value of Teller is $$31\mathrm{.}5$ million, and that of Penn is $$53$ million. The appropriate discount rate for the incremental cash flows is $10$ percent. Penn is trying to decide whether it should offer $40$ percent of its stock or $$44\mathrm{.}5$ million in cash to Teller's shareholders.

a$.$ What is the cost of each alternative?

b$.$ What is the NPV of each alternative?

c$.$ Which alternative should Penn choose?