solution
The Charles Corporation desires to expand. It is considering
a cash purchase of Atlas Enterprises for $2,200,000. The Atlas Corporation has
a $630,000 tax loss carry-forward that could be used immediately by the Charles
Corporation, which is paying taxes at the rate of 30 percent. Atlas will
provide $330.000 per year in cash flow (aftertax Income plus CCA) for the next
25 years
a. If the Charles Corporation has a cost of
capital of 13 percent, compute the net present value. (Use a Financial
calculator to arrive at the answers. Negative answer should be indicated by a
minus sign. Round the final answer to the nearest whole dollar)
Net present value
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Order Paper Nowb. Should the merger be
undertaken? $
Yes
NO
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