Penn Corp. is analyzing the possible acquisition of Teller Company. Both firms have no debt. Penn believes the acquisition will increase its total aftertax annual cash flows by $2 million indefinitely. The current market value of Teller is $45 million, and that of Penn is $91 million. The appropriate discount rate for the incremental cash flows is 10 percent. Penn is trying to decide whether it should offer 40 percent of its stock or $61 million in cash to Teller's shareholders. a. What is the cost of each alternative? (Enter your answer in dollars, not millions of dollars, e. g., 1,234,567.)
Cash cost$
Equity cost$
b. What is the NPV of each alternative? (Enter your answer in dollars, not millions of dollars, e. g., 1,234,567.)
NPV cash$
NPV stock$
c. Which alternative should Penn choose?
Cash
Stock

1. all other things equal, according to the law of demand, when the price of a good falls, the demand for the good falls the demand for the good rises the quantity demanded of the good falls the quantity demanded of the good rises 2. when a market is in equilibrium, the quantity of the good that buyers are willing and able to buy exactly equals the quantity that sellers are willing and able to sell cannot be determined is less than the quantity that sellers are willing and able to sell is greater than the quantity that sellers are willing and able to sell 3. which of the following factors does not influence the demand for a good or service? consumer (buyer) income the price of related goods the number of sellers buyer expectations 4. when the number of sellers in a market increases, demand rises supply rises the price rises, all else equal the number of buyers falls

Which term best fits the sentence? is the process of reasoning, analyzing, and making important decisions. it’s an important skill in making career decisions. a. critical thinking b. weighing pros and cons c. goal setting

Which of the following is a competitive benefit experienced by the first mover firm in an industry? a. the first mover will be able to achieve a less steep learning curve. b. the first mover will be able to reduce the switching costs. c. the first mover will not have to patent its products or technology. d. the first mover will be able to reduce costs through economies of scale.