Pfizer Inc. is considering acquiring a smaller biotech firm. The following data is available:

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    • Purchase Price: $15 billion
    • Synergies Expected: $500 million per year for 10 years
    • Discount Rate: 7%

Requirements:

11. 
    
    3. Calculate the present value of the synergies.
    4. Determine the net present value (NPV) of the acquisition.
    5. Analyze the payback period for the acquisition.
    6. Compute the internal rate of return (IRR).
    7. Evaluate whether Pfizer should proceed with the acquisition.