J & J Enterprises is considering a cash acquisition of Patterson Steel Company for $4,100,000. Patterson will provide the following pattern of cash inflows and synergistic benefits for the next 20 years. There is no tax loss carryforward. Use Appendix D as an approximate answer, but calculate your final answer using the formula and financial calculator methods.

	Years
	1 to 5	6 to 15	16 to 20
Cash inflow (aftertax)	$ 450,000	$ 610,000	$ 810,000
Synergistic benefits (aftertax)	41,000	61,000	71,000

The cost of capital for the acquiring firm is 11 percent.

a. Compute the net present value.

Note: Negative amount should be indicated by a minus sign. Do not round intermediate calculations. Round your answer to 2 decimal places.

Net present value: ______

b. Should the merger be undertaken?

multiple choice

Yes

No