The Clark Corporation desires to expand. It is considering a cash purchase of Kent Enterprises for $3 million. Kent has a $710,000 tax loss carryforward that could be used immediately by the Clark Corporation, which is paying taxes at the rate of 40 percent. Kent will provide $410,000 per year in cash flow (aftertax income plus depreciation) for the next 16 years. The discount rate is 12 percent. Use Appendix D as an approximate answer, but calculate your final answer using the formula and financial calculator methods. a. Compute the net present value. (Negative amount should be indicated by a minus sign. Do not round intermediate calculations. Round your final answer to 2 decimal places.) Net present value b. Should the merger be undertaken? o Yes O No Appendix D Present value of an annuity of $1, PVCA PVA=A 1- (1 + i)" Period 11 ... 1% 0.990 1.970 2.941 3.902 4.853 5.795 6.728 7.652 8.566 9.471 10.368 11.255 12.134 13.004 13.865 14.718 15.562 16.398 17.226 18.046 22.023 25.808 32.835 39.196 2% 0.980 1.942 2.884 3.808 4.713 5.601 6.472 7.325 8.162 8.983 9.787 10.575 11.348 12.106 12.849 13.578 14.292 14.992 15.678 16.351 19.523 22.396 27.355 31.424 3% 0.971 1.913 2.829 3.717 4.580 5.417 6.230 7.020 7.786 8.530 9.253 9.954 10.635 11.296 11.938 12.561 13.166 13.754 14.324 14.877 17.413 19.600 23.115 25.730 4% 0.962 1.886 2.775 3.630 4.452 5.242 6.002 6.733 7.435 8.111 8.760 9.385 9.986 10.563 11.118 11.652 12.166 12.659 13.134 13.590 15.622 17.292 19.793 21.482 5% 0.952 1.859 2.723 3.546 4.329 5.076 5.786 6.463 7.108 7.722 8.306 8.863 9.394 9.899 10.380 10.838 11.274 11.690 12.085 12.462 14.094 15.372 17.159 1 8.256 Percent 6% 7% 0.943 0.935 1.833 1.808 2.673 2.624 3.465 3.387 4.212 4.100 4.917 4.767 5.582 5.389 6.210 5.971 6.802 6.515 7.360 7.024 7.887 7.499 8.384 7.943 8.853 8.358 9.295 8.745 9.712 9.108 10.106 9.447 10.477 9.763 10.828 10.059 11.158 10.336 11.470 10.594 12.783 11.654 13.765 12.409 15.046 13.332 15.762 13.801 8% 0.926 1.783 2.577 3.312 3.993 4.623 5.206 5.747 6.247 6.710 7.139 7.536 7.904 8.244 8.559 8.851 9.122 9.372 9.604 9.818 10.675 11.258 11.925 12.233 9% 10% 11% 12% 0.917 0.909 0.901 0.893 1.759 1.736 1.713 1.690 2.531 2.487 2.444 2.402 3.240 3.170 3.102 3.037 3.890 3.791 3.696 3.605 4.486 4.355 4.231 4.111 5.033 4.868 4.712 4.564 5.535 5.335 5.146 4.968 5.995 5.7595.537 5.328 6.418 6.145 5.889 5.650 6.805 6.495 6.207 5.938 7.1616.814 6.492 6.194 7.487 7.103 6.750 6.424 7.786 7.367 6.982 6.628 8.061 7.606 7.191 6.811 8.313 7.824 7.379 6.974 8.544 8.022 7.5497.120 8.756 8,201 7.702 7.250 8.950 8.365 7.839 7.366 9.129 8.514 7.963 7.469 9.823 9.077 8.422 7.843 10.274 9.427 8.694 8.055 10.7579.7798.951 8.244 10.962 9.915 9.042 8.304 ................ Period 2.951 4.607 13% 0.885 1.668 2.361 2.974 3.517 3.998 4.423 4.799 5.132 5.426 5.687 5.918 6.122 6.302 6.462 6.604 6.729 6.840 6.938 7.025 7.330 7.496 7.634 7.675 14% 0.877 1.647 2.322 2.914 3.433 3.889 4.288 4.639 4.946 5.216 5.453 5.660 5.842 6.002 6.142 6.265 6.373 6.467 6.550 6.623 6.873 7.003 7.105 7.133 15% 0.870 1.626 2.283 2.855 3.352 3.784 4.160 4.487 4.772 5.019 5.234 5.421 5.583 5.724 5.847 5.954 6.047 6.128 6.198 6.259 6.464 6.566 6.642 6.661 16% 17% 18% 0.862 0.855 0.847 1.605 1.585 1.566 2.246 2.210 2.174 2.798 2.743 2.690 3.274 3.199 3.127 3.685 3.589 3.498 4.039 3.922 3.812 4.344 4.207 4.078 4.451 4.303 4.833 4.659 4.494 5.029 4.836 4.656 5.197 4.988 4.793 5.342 5.118 4.910 5.468 5.229 5.008 5.575 5.324 5.092 5.668 5.405 5.162 5.749 5.475 5.222 5.818 5.534 5.273 5.877 5.584 5.316 5.628 5.353 6.097 5.766 5.467 6.177 5.829 5.517 6.2335.8715.548 6.246 5.880 5.554 Percent 19% 0.840 1.547 2.140 2.639 3.058 3.410 3.706 3.954 4.163 4.339 4.486 4.611 4.715 4.802 4.876 4.938 4.988 5.033 5.070 5.101 5.195 5.235 5.258 5.262 20% 0.833 1.528 2.106 2.589 2.991 3.326 3.605 3.837 4.031 4.192 4.327 4.439 4.533 4.611 4.675 4.730 4.775 4.812 4.843 4.870 4.948 4.979 4.997 4.999 25% 30% 35% 0.800 0.769 0 .741 1.440 1.361 1.289 1.952 1.816 1 .696 2.362 2.166 1.997 2.689 2.436 2.220 2.643 2.385 3.161 2.802 2.508 3.329 2.925 2.598 3.463 3.019 2.665 3.571 3.092 2.715 3.656 3.147 2.752 3.725 3.190 2.779 3.780 3.223 2.799 3.824 3.249 2.814 3.859 3.268 2.825 3.887 3.283 2.834 3.910 3.295 2.840 3.928 3.304 2.844 3.311 2.848 3.954 3.316 2.850 3.985 3.329 2.856 3.995 3.332 2.857 3.9993.333 2.857 4.000 3.3332.857 40% 0.714 1.224 1.589 1.849 2.035 2.168 2.263 2.331 2.379 2.414 2.438 2.456 2.469 2.478 2.484 2.489 2.492 2.494 2.496 2.497 2.499 2.500 2.500 2.500 50% 0.667 1.111 1.407 1.605 1.737 1.824 1.883 1.922 1.948 1.965 1.977 1.985 1.990 1.993 1.995 1.997 1.998 1.999 1.999 1.999 2.000 2.000 2.000 2.000 3.942 5.929