You have been asked to evaluate a potential acquisition of a smaller privately owned competitor. The acquisition candidate produces an EBITDA of $10\%$ of your current EBITDA $($$$125\mathrm{.}82$B$)$and is offered to your firm at a price of multiple of $8$ times EBITDA. Assume the following:

Current debt costs you $8\%$ and you can raise additional debt at this rate today. The loan is to be amortized over $7$ years.

Current return on equity is $15\%$

Current WACC is $10\%$

Tax rate is $30\%($constant$)$

$80\%$ of the purchase price is considered depreciable assets $$ to be depreciated over ten years on a straight$-$line basis with no residual values.

Residual value for this operation is to be $2$x current EBITDA in year ten.

Create an after$-$tax cash flow analysis to answer the following:

Economic analysis: is this a fundamentally sound investment?

Using the tax cash flows and no debt $($pure equity$),$ is the prospect a positive NPV using ROE as the hurdle rate?

Is this project desirable? Explain how you came to this conclusion