Cash acquisition decision Benson Oil is being considered for acquisition by Dodd Oil. The combination, Dodd believes, would increase its cash inflows by $26,000 for each of the next 5 years and by $60,000 for each of the following 5 years. Benson has high financial leverage, and Dodd can expect its cost of capital to increase from 11% to 14% if the merger is undertaken. The cash price of Benson is $130,000. a. Would you recommend the merger? b. Would you recommend the merger if Dodd could use the $130,000 to purchase equipment that will return cash inflows of $40,000 per year for each of the next 10 years? a. The net present value of the merger is $ . (Round to the nearest cent.) Would you recommend the merger? (Select the best answer below.) O Yes b. The net present value of purchasing the new equipment is $ . (Round to the nearest cent.) Which alternative would you recommend? (Select the best answer below.) O O Acquire Benson Oil Purchase the new equipment Cash acquisition decision Benson Oil is being considered for acquisition by Dodd Oil. The combination, Dodd believes, would increase its cash inflows by $26,000 for each of the next 5 years and by $60,000 for each of the following 5 years. Benson has high financial leverage, and Dodd can expect its cost of capital to increase from 11% to 14% if the merger is undertaken. The cash price of Benson is $130,000. a. Would you recommend the merger? b. Would you recommend the merger if Dodd could use the $130,000 to purchase equipment that will return cash inflows of $40,000 per year for each of the next 10 years? a. The net present value of the merger is $ . (Round to the nearest cent.) Would you recommend the merger? (Select the best answer below.) O Yes b. The net present value of purchasing the new equipment is $ . (Round to the nearest cent.) Which alternative would you recommend? (Select the best answer below.) O O Acquire Benson Oil Purchase the new equipment