Shoop Ltd is considering the acquisition of Requim Inc. The values of Shoop Ltd is $13.8 million and Requim Inc is $8.8 million. Shop Ltd estimates that by merging the two companies it will decrease expenses by $480000 per annum in perpetuity. Shoop Ltd can either pay $10.9 million cash for Requim Inc or offer Requim Inc a 50 per cent holding in Shoop Ltd. If the cost of capital is 10 per cent per annum: (a) What is the gain, in present value terms, from the merger? (b) What is the net cost of the cash offer?

(c) What is the net cost of the share alternative?

(d) What is the NPV of the acquisition under (Negative amounts should be indicated by a minus sign. Enter your answers in millions. Round your answers to 2 decimal places.): NPV under the cash offer? NPV under the share offer?