Page 5 of 8 Download Diofo Question 5 CBN Inc. is considering expanding its business by acquiring ABM Inc. CBN has estimated that its annual net cash flow will increase from $2.5 million per year (at present) to $2.95 million per year in perpetuity, with the first increase occurring exactly 4 years from the acquisition. If the acquisition were to proceed, CBN will however incur re-organization and integration costs of $500,000 per annum at the end of the first two years after the acquisition. The appropriate cost of capital is 15% per annum. CBN should not proceed with the acquisition because the synergy from the acquisition is negative. Question 6 True/False 200M