The Bucket Company (Bucket) is evaluating acquiring The Shovel (Shovel) company to expand its product offering. The acquisition would cost Bucket $155 million. Bucket believes that Shovel would increase its annual cash flows by $12 million for the 20 years, at which point the company will explode.

A quick look at Bucket5s Balance Sheet (January 31, 2019) and you find the following information:

• Bonds Payable Maturity Date Jan 31, 2035, $100

Coupon paid semi annually, $1,000 Par Value $95,000,000

• Common Shares 500,000 shares outstanding $55,000,000
• Preferred Shares $100 par value 8% cumulative

200,000 outstanding $18,980,000

A quick look at a financial website gives you the following information:

• Current Price of a Buckets Bond is $987.48
• Current Price of a Buckets Common Share is $107.35 and it has a Beta of 1.3
• Current Price of a Buckets Preferred Share is $98.77
• A fiveyear fixed GIC is 2.5%
• Over the past 10 years the TSX has had an annual return of 10%
• Buckets Tax Rate is 30%

Required: Based on a Net Present Value calculation, financially speaking, should Bucket acquire Shovel?