Question
PLEASE ANSWER IN NEXT 30 MINUTES I NEED IT QUICK!!! I WILL RATE! J & J Enterprises is considering a cash acquisition of Patterson Steel
PLEASE ANSWER IN NEXT 30 MINUTES I NEED IT QUICK!!! I WILL RATE!
J & J Enterprises is considering a cash acquisition of Patterson Steel Company for $5,200,000. Patterson will provide the following pattern of cash inflows and synergistic benefits for the next 20 years. There is no tax loss carryforward. Use Appendix D as an approximate answer, but calculate your final answer using the formula and financial calculator methods.
| Years | |||||||||
| 15 | 615 | 1620 | |||||||
| Cash inflow (aftertax) | $ | 560,000 | $ | 720,000 | $ | 920,000 | |||
| Synergistic benefits (aftertax) | 52,000 | 72,000 | 82,000 | ||||||
The cost of capital for the acquiring firm is 14 percent.
a. Compute the net present value.
b. Should the merger be taken?
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