The Charles Corporation desires to expand. It is considering a cash purchase of Atlas Enterprises for $3,700,000. The Atlas Corporation has a $880,000 tax loss carry-forward that could be used immediately by the Charles Corporation, which is paying taxes at the rate of 30 percent. Atlas will provide $480,000 per year in cash flow (after tax income plus CCA) for the next 17 years.

a. If the Charles Corporation has a cost of capital of 13 percent. compute the net present value. (Use a Financial calculator to arrive at the answers. Negative answer should be indicated by a minus sign. Round the final answer to the nearest whole dollar.)

b. Should the merger be undertaken?