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Your firm plans to buy another company for $100 million. The acquisition is expected to generate net benefit of $20 million per year (at year-end)
Your firm plans to buy another company for $100 million. The acquisition is expected to generate net benefit of $20 million per year (at year-end) over 3 years and then $25 million indefinitely (perpetually). If your firms cost of capital is 12%, what is the NPV of the proposal and is it worth it?
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