Worldwide Scientific Equipment is considering a cash acquisition of Medical Labs for $1.8 million. Medical Labs will provide the following pattern of cash inflows and synergistic benefits for the next 25 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			1625
Cash inflow (aftertax)	$	170,000		$	190,000		$	230,000
Synergistic benefits (aftertax)		22,000			32,000			52,000

The cost of capital for the acquiring firm is 11 percent.

a. Compute the net present value. (Negative amount should be indicated by a minus sign. Enter your answer in dollars not in millions. Do not round intermediate calculations. Round your final answer to 2 decimal places.)

b. Should the merger be undertaken?

multiple choice

• Yes

• No