Problem 21-9 Merger Gains and Costs (LO2) Velcro Saddles is contemplating the acquisition of Skiers' Airbags Incorporated. The values of the two companies as separate entities are $60 million and $30 million, respectively. Velcro Saddles estimates that by combining the two companies, it will reduce marketing and administrative costs by $700,000 per year in perpetuity. Velcro Saddles is willing to pay $35 million cash for Skiers'. The opportunity cost of capital is 10%. a. What is the gain from the merger? Note: Enter your answer in millions rounded to 2 decimal places. b. What is the cost of the cash offer? Note: Enter your answer in millions. c. What is the NPV of the acquisition under the cash offer? Note: Do not round intermediate calculations. Enter your answer in millions rounded to 2 decimal places. Answer is complete but not entirely correct. a. Gain from the merger b. Cost of the cash offer c. NPV 44.65 million 30 million 14.65 million