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Worldwide Scientific Equipment is considering a cash acquisition of Medical Labs for $3.3 million. Medical Labs will provide the following pattern of cash inflows
Worldwide Scientific Equipment is considering a cash acquisition of Medical Labs for $3.3 million. Medical Labs will provide the following pattern of cash inflows and synerg 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. Cash inflow (aftertax) Synergistic benefits (aftertax) Years 1-5 6-15 16-25 $320,000 $340,000 $380,000 37,000 47,000 67,000 The cost of capital for the acquiring firm is 10 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.) Net present value b. Should the merger be undertaken?
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