Three Waters Co$.$ is considering an acquisition of Thatherton Fuels., and estimates that acquiring Thatherton will result in incremental

after$-$tax net cash flows in years $1-3$ of $$5$ million, $$7\mathrm{.}5$ million, and $$9$ million, respectively.

After the first three years, the incremental cash flows contributed by the Thatherton acquisition are expected to grow at a constant rate

of $3\%$ per year. Three Waters's current beta is $1\mathrm{.}60,$ but its post$-$merger beta is expected to be $2\mathrm{.}08.$ The risk$-$free rate is $5\mathrm{.}5\%,$ and the

market risk premium is $7\mathrm{.}60\%.$

Based on this information, complete the following table by selecting the appropriate values. $($Note: Round your intermediate calculations to two

decimal places.$)$

Value

Post$-$merger cost of equity

Projected value of the cash flows at the end of three years

The value of Thatherton Fuels' contribution to Three Waters Co$.$

Thatherton Fuels has $5$ million shares of common stock outstanding. What is the largest tender offer Three Waters Co$.$ should make on each of

Thatherton Fuels' shares?

$$8\mathrm{.}52$

$$10\mathrm{.}22$

$$6\mathrm{.}82$

$$10\mathrm{.}23$