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10 Nov 2019
Worldwide Scientific Equipment is considering a cash acquisition of Medical Labs for $2.4 million. Medical Labs will provide the following pattern of cash inflows and synergistic benefits for the next 25 years. There is no tax loss carryforward. Use Appendix D as an approximate answer, but calculate your final answer using the formula and financial calculator methods.
Years
1â5 6â15 16â25 Cash inflow (aftertax) $230,000 $250,000 $290,000 Synergistic benefits (aftertax) 28,000 38,000 58,000
The cost of capital for the acquiring firm is 12 percent.
a. Compute the net present value. (Negative amount should be indicated by a minus sign. Enter your answer in dollars not in millions. Do not round intermediate calculations. Round your final answer to 2 decimal places.)
Net present value
b. Should the merger be undertaken?
No Yes
Worldwide Scientific Equipment is considering a cash acquisition of Medical Labs for $2.4 million. Medical Labs will provide the following pattern of cash inflows and synergistic benefits for the next 25 years. There is no tax loss carryforward. Use Appendix D as an approximate answer, but calculate your final answer using the formula and financial calculator methods.
Years | |||
1â5 | 6â15 | 16â25 | |
Cash inflow (aftertax) | $230,000 | $250,000 | $290,000 |
Synergistic benefits (aftertax) | 28,000 | 38,000 | 58,000 |
The cost of capital for the acquiring firm is 12 percent.
a. Compute the net present value. (Negative amount should be indicated by a minus sign. Enter your answer in dollars not in millions. Do not round intermediate calculations. Round your final answer to 2 decimal places.)
|
b. Should the merger be undertaken?
No | |
Yes |
17 Dec 2021
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Trinidad TremblayLv2
9 Oct 2019
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