When an acquirer assesses a potential target, the price the acquirer is willing to pay should be based on the value of:

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When an acquirer assesses a potential target, the price the
acquirer is willing to pay should be based on the value of:
The target firm’s total corporate value (debt and
equity)
The target firm’s equity
The target firm’s debt
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 $14.00
million, $21.00 million, and $25.20 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 6% per year. Ziffy’s current beta is 1.60, but its
post-merger beta is expected to be 2.08. The risk-free rate is 5%,
and the market risk premium is 7.10%.
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
Keedsler Motors Co. has 6 million shares of common stock
outstanding. What is the largest tender offer Ziffy Corp. should
make on each of Keedsler Motors Co.’s shares?
$25.65
$20.52
$30.78
$30.79