Zoolander Industries is considering purchasing Tyco Manufacturing in a friendly takeover.Zoolander's board estimates the full purchase of Tyco will cost $250,000,000 and will generate for the firm cash inflows of $25,000,000 a year for the next 3 years and then $30,000,000 a year continuously after then.Zoolander's board believes the appropriate discount rate is 10% p.a.What is the NPV of this purchase decision?
A)$287,565,740.00
B)$362,171,299.80
C)$112,171,299.80
D)$37,565,740.00

Question

Quizplus · Accepted Answer

The Answer of Zoolander Industries is considering purchasing Tyco Manufacturing in a friendly takeover.Zoolander's board estimates the full purchase of Tyco will cost $250,000,000 and will generate for the firm cash inflows of $25,000,000 a year for the next 3 years and then $30,000,000 a year continuously after then.Zoolander's board believes the appropriate discount rate is 10% p.a.What is the NPV of this purchase decision?
A)$287,565,740.00
B)$362,171,299.80
C)$112,171,299.80
D)$37,565,740.00

Zoolander Industries Is Considering Purchasing Tyco Manufacturing in a Friendly