NPV calculations

Merger of hotels

Consideration transferred

cash 5 million

payable 5 million in equal annual payments at 10%

Net capital assets acquired fav 12 million fmv

land 2 million

equipment 8 million CCA rate 4% useful life 40 years

tax rate 40%

Savings

revenue = 13,707,575 annually

Additional revenue = 600,000 as referral revenue

Variable service costs = 5,620,106

Discount rate 15%

Life of project 40