Question: please help me answer this question Suppose you are the owner of a company. which generates a free cash ow of $0.6 million per year

please help me answer this question

please help me answer this question Suppose you
Suppose you are the owner of a company. which generates a free cash ow of $0.6 million per year in perpetuity. Suppose the current oneyear riskfree interest rate is 6%, and the cost of capital for your company is estimated to be 11.5%. Tvvo firms want to buy your company. The first bidder is Ansoft. a listed company. According to Ansoft's offer, you will receive 1 .5 million shares of Anso. with each share currently trading at $3.4 per share. You can sell the shares of Ansott that you will receive in the market at any time. In the offer. Anso also agrees that after one year, it will buy the shares back from you for $3.5 per share if you desire. Suppose the volatility of Ansoft stock is 20%, and Ansoft does not pay dividends. The second bidder is Rosecurity, a private company. Rosecurity offers $5.2 million cash to buy your company. Which of the following statement is true? O a. You should sell your company to Ansoft so you can get a gain of $0.2 million. O b. You should keep your company as your firm value is higher than either of these two offers. O c. You should sell your company to Ansoft so you can get a gain of $0.3 million. O (1. You should sell your company to Ansoft so you can get a gain of $0.1 million

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