John decided to purchase a firm which is expected to generate net cash flows of $5,000 one year from now, $2,000 at the end of each of the next five years and a $10,000 in seven years from now. Investments of similar characteristics and risk in the market have a discount rate of 10%.

(a)Determine the value of the firm. 

(b)What is the incremental value (NPV) of this acquisition if the initial investment made by John is $12,000?