The Stanley Stationery Shoppe wants to acquire The Carlson Card Gallery for $400,000. Stanley expects the merger

Question:

The Stanley Stationery Shoppe wants to acquire The Carlson Card Gallery for $400,000. Stanley expects the merger to provide incremental earnings of about $64,000 a year for 10 years. Ken Stanley has calculated the marginal cost of capital for this investment to be 10%. Conduct a capital budgeting analysis for Stanley to determine whether he should purchase The Carlson Card Gallery.

Capital Budgeting
Capital budgeting is a practice or method of analyzing investment decisions in capital expenditure, which is incurred at a point of time but benefits are yielded in future usually after one year or more, and incurred to obtain or improve the... Cost Of Capital
Cost of capital refers to the opportunity cost of making a specific investment . Cost of capital (COC) is the rate of return that a firm must earn on its project investments to maintain its market value and attract funds. COC is the required rate of...