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Cash acquisition decision Solar Solutions is being considered for acquisition by Energy Resource. Energy Resource believes the combination would increase its cash inflows by $
Cash acquisition decision Solar Solutions is being considered for acquisition by Energy Resource. Energy Resource believes the combination would increase its cash inflows by $ for each of the next five years and by $ for each of the following five years. Solar Solutions has high financial leverage, and Energy Resource can expect its cost of capital to increase from to if the merger is undertaken. The cash price of Solar Solutions is $
a Would you recommend the merger?
b Would you recommend the merger if Energy Resource could use the $ to purchase equipment that will return cash inflows of $ per year for each of the next years?
a The net present value of the merger is $Round to the nearest cent.
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