A company, The Bold and the Beautiful Haircare Products, wishes to purchase a smaller company called The Young & Restless Products, Inc.. The acquisition by B&B of Y&R will cost B&B $10,000,000 at the end of 2018. They expect to receive $700,000 of net cash flow after all operating expenses each year for the next 20 years. The weighted average cost of capital, the risk of the intended acquisition and the expected profit margin calls for a company wide discount rate of 14% according to the CFO in 2018.

What is the NPV?

What is the IRR?

Should the acquisition go forward as planned if the regulators approve it? Why or Why not?

What risks does this company face from this potential acquisition?