Sunny Co. is considering an acquisition of Smith and TCO. (S\&T). Sunny estimates that acquiring S\&T will result in incremental value for the firm. The analysts involved in the deal have collected the following information from the projected financial statements of the target company. SBT is a publicly traded compony, and its market-determined premerger beta is 1.40. You also have the following information about the company and the projected statements. - SAT currently has a market value of equity of $14.00 million and $9.10 million in debt. - The risk-free rate is 3.5% with a market risk premium of 5.60%, and the Capital Asset Pricing Model produces a premerger required rate of return on equity, rit, of 11.34%. - S8T's cost of debt is 5.50% at a tax rate of 40%. - The projections assume that the company will have a post-horizon growth rate of 4.50%. - Current total net operating capital is $120.00, and the sum of existing debt and debt required to maintain a constant capital structure at the time of acquisition is $31 million. - The firm has no nonoperating assets, such as marketable securities. With the glven information, use the free cash flow to equity (FCFE) approach to calculate the following values involved in the merger analysis: The estimated value of S\&T's operations after the merger is than the market value of S\&T's equity. This means that the wealth of S\&T's shareholders will if it merges with Sunny rather than remaining as a stand-alone corporation