Problem 21-10 Stock versus Cash Offers (LO2) Velcro Saddles is contemplating the acquisition of Skiers' Airbags Incorporated The values of the two companies as separate entities are $22 million and $11 million, respectively. Velcro Saddles estimates that by combining the two companies, it will reduce marketing and administrative costs by $510,000 per year in perpetuity. Velcro Saddles considers offering Skiers' shareholders a 50% holding in Velcro Saddles. The opportunity cost of capital is 10%. a. What is the value of the stock in the merged company held by the original Skiers' shareholders? Note: Do not round intermediate calculations. Enter your answer in millions rounded to 2 decimal places. b. What is the cost of the stock alternative? Note: Do not round intermediate calculations. Enter your answer in millions rounded to 2 decimal places. c. What is the merger's NPV under the stock offer? Note: A negative amount should be indicated by a minus sign. Do not round intermediate calculations. Enter your answer in millions rounded to 2 decimal places. a. Value of the stock b. Cost of the stock c. NPV million million million