Question: PLEASE ANSWER IN NEXT 30 MINUTES I NEED IT QUICK!!! I WILL RATE! J & J Enterprises is considering a cash acquisition of Patterson Steel

PLEASE ANSWER IN NEXT 30 MINUTES I NEED IT QUICK!!! I WILL RATE!

J & J Enterprises is considering a cash acquisition of Patterson Steel Company for $5,200,000. Patterson will provide the following pattern of cash inflows and synergistic benefits for the next 20 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		1620
Cash inflow (aftertax)	$	560,000	$	720,000	$	920,000
Synergistic benefits (aftertax)		52,000		72,000		82,000

The cost of capital for the acquiring firm is 14 percent.

a. Compute the net present value.

b. Should the merger be taken?

Step by Step Solution

There are 3 Steps involved in it

1 Expert Approved Answer

Step: 1 Unlock blur-text-image

Question Has Been Solved by an Expert!

Get step-by-step solutions from verified subject matter experts

Step: 2 Unlock

Step: 3 Unlock

Students Have Also Explored These Related Finance Questions!

1)Based on data given in the Virgin Mobile case, on average how long did it take for the carriers to break even on the acquisition cost? (6 pts.) HINT: Break-even time = Acquisition cost / average...

Please see attachment for assistance with finance homework. Neuqun, Inc., a publicly traded firm, is considering the acquisition of a private company, Artforever.com, which specializes in restoring...

Hello. Can you help with this four question problem? Case PRIVATE EQUITY CASE: MERGER CONSOLIDATION The questions below COMBINE the Ohio & Maryland PT acquisitions as if they are a single c Learning...

only question 2.. plz help me.. im offering all my credits. i swear... Faculty of Business, Economics & Accounting Department of Accounting and Finance HELP Bachelor of Business (Hons) Year 3...

1. Calculate the cost of each capital component, after-tax cost of debt, cost of preferred, and cost of equity with the DCF method and CAPM method. 2. What do you estimate the company?s WACC? Please...

PROJECT SPECIFICATIONS The information provided in this test allows you to set up the General, Payables and Receivables ledgers for an Ontario company named GEORGE'S WELDING owned and run by Chris...

Montonya Company has the following selected data for the current year: Sales (10,000 units) $90,000 Direct materials 30,000 Direct labor costs 10,000 Variable manufacturing overhead 3,500 Fixed...

Question 1 , Question 2 and Question 5 part (ii) thanks alot Faculty of Business, Economics & Accounting Department of Accounting and Finance HELP Bachelor of Business (Hons) Year 3 INTERNAL SUBJECT...

1. The Charles Corporation desires to expand. It is considering a cash purchase of Atlas Enterprises for $2,600,000. The Atlas Corporation has a $670,000 tax loss carry-forward that could be used...

From Fig. 10.3, determine in which direction the glacial ice that abraded the bedrock exposure was moving.

Some economists such as William Baumol and Alan Blinder, criticize the market economy as pro-wealthy. They declare, "This rationing process does favor the rich, and is a problem that market economies...

Question 3 With higher leverage ( Debt / Value ratio ) , the cost of equity increases due to financial risk. increases due to operational risk. decreases due to financial risk. decreases due to...

Example 4 A Test for Homogeneity of Proportions(Please provide answer in Minitab with instructions) Problem Zocor is a drug manufactured by Merck and Co. that is meant to reduce the level of LDL...

List four examples of feedback you can give to a speaker that would indicate you understand his or her message. (Objective 4)

Teamwork. Conduct the following exercise with teams of five people. The instructor will read a factual story (from a newspaper, magazine, or other source) to one member of each team. That person will...

Good listeners can be described as patient and sincere; bad listeners can be described as self-centered and intolerant. What other words describe good listeners? bad listeners? List at least three...