Basa Company is considering the acquisition of B mining at a cash price of P2,000,000.00. The primary motivation for Basa's purchase of B is for special piece of equipment that it believes will generate after-tax cash flows is P500,000 per year during the next 3 years. B has liabilities of P3,000,000.00 and Basa's estimates that it can sell the remaining assets P2,200,000.00. Basa's will use a 10% cost of capital for evaluating the acquisition. Based on this information, what is the net value of the special drilling equipment? (Lagyan ng parenthesis pag negative) round PV un to 5 deecimals)

Basa Company is considering the acquisition of B mining at a cash price of P2,000,000.00. The primary motivation for Basa's purchase of B is for special piece of equipment that it believes will generate after-tax cash flows is P500,000 per year during the next 3 years. B has liabilities of P3,000,000.00 and Basa's estimates that it can sell the remaining assets P2,200,000.00. Basa's will use a 10% cost of capital for evaluating the acquisition. Based on this information, what is the net value of the special drilling equipment? (Lagyan ng parenthesis pag negative) round PV un to 5 deecimals)

EBK CONTEMPORARY FINANCIAL MANAGEMENT

14th Edition

ISBN:9781337514835

Author:MOYER

Publisher:MOYER

Chapter9: Capital Budgeting And Cash Flow Analysis

Section: Chapter Questions

Problem 17P

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