Universal Drapers Inc. is considering an acquisition of Mammoth Pictures Inc., and estimates that acquiring Mammoth will result in incremental after-tax net cash flows in years 13 of $16 million, $24 million, and $28.8 million, respectively.

After the first three years, the incremental cash flows contributed by the Mammoth acquisition are expected to grow at a constant rate of 5% per year. Universals 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%.

What is the Post merger cost of equity

A. 16.62%

B. 18.23%

C. 13.80%

C. 15.06%

What is the Projected Value of cash flows at the end of three years

A. 217.69 million

B. 604.80 million

C. 186.32 million

D. 228.57 million

What is the value of Mammoth Picture's Inc's Contribution to Universal Drapers Inc?

A. 149.14 million

B. 242.36 million

C. 186.43 million

D. 223.72 million

Mammoth Pictures Inc. has 3 million shares of common stock outstanding. What is the largest tender offer Universal Drapers Inc. should make on each of Mammoth Pictures Inc.s shares?

A.$74.57

B. $62.14

C. $49.71