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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 $30,000 for each of the next five years and by $58,000 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 11% to 14% if the merger is undertaken. The cash price of Solar Solutions is $115,000.
a. Would you recommend the merger?
b. Would you recommend the merger if Energy Resource could use the $115,000 to purchase equipment that will return cash inflows of $38,000 per year for each of the next 10 years?
a. The net present value of the merger is $.(Round to the nearest cent.)
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