J & J Enterprises is considering a cash acquisition of Patterson Steel Company for $4,200,000. 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 15 615 1620 Cash inflow (aftertax) $ 460,000 $ 620,000 $ 820,000 Synergistic benefits (aftertax) 42,000 62,000 72,000

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

a. Compute the net present value. (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?

Yes

No