How to calculate the npv for the acquisition

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Reference no: EM132706354

NPV calculations Acquisition of hotel Considerations transferred

Cash 5 million

Payable 5 million equal annual payments at 10%

Net capital assets acquired fmv 12 million

Land : 2million

Equipment: 2 million CCA rate 20%

Building: 8 million CCA rate 4% useful life 40

Tax rate : 40%

Savings

Revenue of the hotel = 37555 daily revenue = 13,707,575 annual revenue

Referral = 600,000 additional revenue

Variable service cost = 41% of revenue = 41%*13,707,575 = 5,620,106

Problem 1: How to calculate the NPV for the acquisition

Reference no: EM132706354

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