Three Waters Co. is considering an acquisition of Tolbotics Inc., and estimates that acquiring Tolbotics will result in incremental after-tax net cash flows in years 13 of $9 million, $13.5 million, and $16.2 million, respectively. After the first three years, the incremental cash flows contributed by the Tolbotics acquisition are expected to grow at a constant rate of 6% per year. Three Waterss current beta is 1.60, but its post-merger beta is expected to be 2.08. The risk-free rate is 4.5%, and the market risk premium is 6.60%.

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

Post-merger cost of equity
Projected value of the cash flows at the end of three years
The value of Tolbotics Inc.s contribution to Three Waters Co.

Tolbotics Inc. has 4 million shares of common stock outstanding. What is the largest tender offer Three Waters Co. should make on each of Tolbotics Inc.s shares?

$22.41

$28.01

$33.61

$33.60