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In: Finance
Worldwide Scientific Equipment is considering a cash acquisition of Medical Labs for $1.4 million. Medical Labs...
Worldwide Scientific Equipment is considering a cash acquisition of Medical Labs for $1.4 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 1–5 6–15 16–25 Cash inflow (aftertax) $130,000 $150,000 $190,000 Synergistic benefits (aftertax) 18,000 28,000 48,000 The cost of capital for the acquiring firm is 11 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? Yes No
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jeff jeffy answered 1 year agoRelated Solutions
Worldwide Scientific Equipment is considering a cash acquisition of Medical Labs for $3.4 million. Medical Labs...
Worldwide Scientific Equipment is considering a cash acquisition
of Medical Labs for $3.4 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
1–5
6–15
16–25
Cash inflow (aftertax)
$
330,000
$
350,000
$
390,000
Synergistic benefits (aftertax)
38,000
48,000
68,000
The cost of capital...
An initial cash outlay of $1.4 million is made for a project. In Year 1, the...
An initial cash outlay of $1.4 million is made for a project. In
Year 1, the expected annual cash flow is $900,000. In Years 2–5 the
expected annual cash flow is $1,000,000, and in Year 6, the
expected annual cash flow is $1.3 million. A cost of capital of 15%
is used. The IRR (internal rate of return) is ???
Please show work/calculation using Texas Calculator. No
excel.
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