Question: Zylon Co. is a U.S, firm that provides technology softwore for the government of Singapore. It will be paid 557 million at the end of

 Zylon Co. is a U.S, firm that provides technology softwore for

Zylon Co. is a U.S, firm that provides technology softwore for the government of Singapore. It will be paid 557 million at the end of each of the next five years. The entire amount of the payment represents earnings becouse Zylon creoted the tectunology software years sgo. Zylon is subject to o 30 percent corporote income tax rate in the United 5 taton. Its other cath inflows (Euch as revenue) are expected to be offset by its other cash outfows (due to operating experses) each yesr, so its prohts on the singapore contract represent its expected annual net cash exchange rates. is charged an inferest rate of 13 percent on its dest. Zyon's cost of equity is based on the capM. It expects that the U.S. annual market return will be 13 percent per yes. its beta is 1.7. Quiso Co. a U. S. Nirm, wants to ocquire zylan and effers zylon a price of s9 mition. PV of fergene caun flows is s this is than zylon would ceceive from aeling the butiness, te it sell the business

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