Through a "Type C" reorganization, Springer Corporation was merged into Spaniel Corporation last year. Springer shareholders received 50% of the Spaniel stock in exchange for all of their Springer shares. Springer liquidated immediately after the exchange. At the time of the merger, Springer was worth $6,300,000. The Springer shareholders are promised that Spaniel will purchase for $9,000,000 all of their stock five years after the reorganization.

The present value factor for five years at 5% is .784.

If the shareholders use a 5% discount rate, should this offer be accepted?

Yes, because the present value of receiving $9,000,000 in five years using a 5% discount rate is $__________ which is greater than the value of the stock at the time of the merger.