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Cautionary? Tales, Inc., is considering the acquisition of Danger Corp. at its asking price of ?$160,000. Cautionary would immediately sell some of? Danger's assets for ?$16,000 if it makes the acquisition. Danger has a cash balance of ?$1,600 at the time of the acquisition. If Cautionary believes it can generate? after-tax cash inflows of ?$30,000 per year for the next 8 years from the Danger? acquisition, should the firm make the? acquisition? Base your recommendation on the net present value of the outlay using? Cautionary's 8?% cost of capital.

The net present value of the acquisition is ?$ . ?(Round to the nearest? dollar.)

Financial Management, Finance

  • Category:- Financial Management
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