TransWorld Communications Inc., a large telecommunications company, is evaluating the possible acquisition of Georgia Cable Company (GCC), a regional cable company. TransWorld's analysts project the following postmerger data for GCC (in thousands of dollars):

		2012	2013	2014	2015
Net sales		$450	$518	$555	$600
Selling and administrative expense		45	53	60	68
Interest		18	21	24	27
Tax rate after merger	35%
Cost of goods sold as a percent of sales	65%
Beta after merger	1.50
Risk-free rate	5%
Market risk premium	5%
Terminal growth rate of cash flow
available to TransWorld	5%

If the acquisition is made, it will occur on January 1, 2012. All cash flows shown in the income statements are assumed to occur at the end of the year. GCC currently has a capital structure of 40% debt, but TransWorld would increase that to 50% if the acquisition were made. GCC, if independent, would pay taxes at 20%, but its income would be taxed at 35% if it were consolidated. GCC's current market-determined beta is 1.40, and its investment bankers think that its beta would rise to 1.50 if the debt ratio were increased to 50%. The cost of goods sold is expected to be 65% of sales, but it could vary somewhat. Depreciation-generated funds would be used to replace worn-out equipment, so they would not be available to TransWorld's shareholders. The risk-free rate is 5%, and the market risk premium is 5%.

a. What is the appropriate discount rate for valuing the acquisition? Round your answer to two decimal places.

b. What is the terminal value? Enter your answer in thousands. For example, an answer of $13,000 should be entered as 13. Round your answer to two decimal places.

c. What is the value of GCC to TransWorld? Enter your answer in thousands. For example, an answer of $13,000 should be entered as 13. Round your answer to two decimal places.