NPV calculations

Acquisition of hotel

Considerations transferred

Cash 5 million

Payable 5 million equal annual payments at 10%

Net capital assets acquired fmv 12 million

Land : 2million

Equipment: 2 million CCA rate 20%

Building: 8 million CCA rate 4% useful life 40 years

Tax rate : 40%

Savings

Revenue of the hotel = 37555 daily revenue = 13,707,575 annual revenue

Referral = 600,000 additional revenue

Variable service cost = 41% of revenue = 41%*13,707,575 = 5,620,106

How to calculate the NPV for this acquisition

discount rate 15%

Life of project 40