Question
Apple Inc. is evaluating the acquisition of a smaller tech company. The acquisition price is set at $2 billion. The smaller company is expected to
Apple Inc. is evaluating the acquisition of a smaller tech company. The acquisition price is set at $2 billion. The smaller company is expected to generate additional annual cash flows of $400 million for the next 6 years. The appropriate discount rate is 10%.
- Requirements:
- Calculate the Net Present Value (NPV) of the acquisition.
- Calculate the Payback Period for the investment.
- Discuss the strategic benefits and risks associated with the acquisition.
- Evaluate the impact on Apple Inc.'s earnings per share (EPS) post-acquisition.
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Accounting Theory Conceptual Issues in a Political and Economic Environment
Authors: Harry Wolk, James Dodd, John Rozycki
8th edition
1412991692, 978-1412991698
