What is the npv of the purchase of the company

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You are considering buying a company for $150 million. The purchase has an NPV of $30 million using a cost of capital of 10%. Furthermore, you think you could invest in a project after you buy it that cost an additional $20 million and further improve its operations by $4 million per year (after tax). Assume the $20 million project has a 10 year life.

(A) What is the IRR of the $20 million project?

(B) What is the NPV of the purchase of the company when you include the consideration of the $20 million project?

Reference no: EM132186898

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