Solution-Base your recommendation on the net present value

Base your recommendation on the net present value

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Reference no: EM131110328

Cautionary Tales, Inc., is considering the acquisition of Danger Corp. at its asking price of $150,000. Cautionary would immediately sell some of Danger's assets for $15,000 if it makes the acquisition. Danger has a cash balance of $1,500 at the time of the acquisition. If Cautionary believes it can generate after-tax cash inflows of $25,000 per year for the next 7 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 10% cost of capital.

Reference no: EM131110328

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Base your recommendation on the net present value

Reference no: EM131110328

Reference no: EM131110328

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