Q6) Wheatley Corp. is analyzing the possible acquisition of Romney Company. Both firms have no debt. Wheatley believes the acquisition will increase its total after-tax annual cash flows by $2,000,000 indefinitely. The current market value of Romney is $43,000,000, and that of Wheatley is $89,000,000. The appropriate discount rate for the incremental cash flows is 10%. Wheatley is trying to decide whether it should offer 40% of its stock or $61,000,000 in cash to Romney's shareholders. Based on the given information, please answer questions a, b, and c. (6 Points)

a) What is the cost of each alternative? (3 Points)

b) What is the NPV of each alternative? (2 Points)

c) Which alternative should Wheatley choose? (1 Point)