When a merger takes place between two companies to form a single firm, the target company to operate as a separate identity.

Consider the following scenario:

Ziffy Corp. is considering an acquisition of Keedsler Motors Co$.,$ and estimates that acquiring Keedsler will result in incremental after$-$tax net cash flows in years $1-3$ of $$8\mathrm{.}00$ million, $$12\mathrm{.}00$ million, and $$14\mathrm{.}40$ million, respectively.

After the first three years, the incremental cash flows contributed by the Keedsler acquisition are expected to grow at a constant rate of $3\%$ per year. Ziffy's current beta is $1\mathrm{.}60,$ but its post$-$merger beta is expected to be $2\mathrm{.}08.$ The risk$-$free rate is $5\%,$ and the market risk premium is $7\mathrm{.}10\%.$

Based on this information, complete the following table by selecting the appropriate values $($Note: Do not round intermediate calculations, but round your answers to two decimal places$)$:

Value

Post$-$merger cost of equity

Projected value of the cash flows at the end of three years

The value of Keedsler Motors Co$.\text{'}$s contribution to Ziffy Corp.

Keedsler Motors Co$.$ has $3$ million shares of common stock outstanding. What is the largest tender offer Ziffy Corp. should make on each of Keedsler Motors Co$.\text{'}$s shares?

$$24\mathrm{.}97$

$$29\mathrm{.}97$

$$19\mathrm{.}98$

$$29\mathrm{.}96$