Southern Discomfort, Inc. makes soda bottles and is considering diversifying its business by purchasing LuvPet, Inc., a company that makes pet food. Southerns beta is 1.60, and the beta of LuvPet is 1.28. The market risk premium is 12.60%, and the Treasury bill yield is 1.20%. LuvPet is projected to produce cash flows of $35 million in perpetuity.

a. What is the appropriate discount rate for valuing LuvPet? (Enter your answer as a percentage rounded to two decimal places.)

b. What is the estimated value of the LuvPet purchase? (Enter your answers in millions rounded to two decimal places.)