Worldwide Scientific Equipment is considering a cash acquisition of Medical Labs for $$1\mathrm{.}7$ 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

$1$ to $56$ to $1516$ to $25$

Cash inflow $($aftertax$)$ $ $160,000$ $ $180,000$ $ $220,000$

Synergistic benefits $($aftertax$)21,00031,00051,000$

The cost of capital for the acquiring firm is $12$ percent.

a$.$ Compute the net present value.

b$.$ Should the merger be undertaken?