Velcro Saddles is contemplating the acquisition of Pogo Ski Sticks Inc. The values of the two companies as separate entities are $22 million and $11 million, respectively. Velcro Saddles estimates that by combining the two companies, it will reduce marketing and administrative costs by $600,000 per year in perpetuity. The opportunity cost of capital is 8%. Velcro Saddles considers offering Pogo shareholders a 40% holding in Velcro Saddles after the acquisition. What is the merger's NPV under the stock offer?

• A. 5.2
• B. -2.3
• C. -5.2
• D. 2.3