ABC is considering acquiring XYZ and has compiled this information on XYZ: The applicable tax rate is 21 percent and the terminal value of XYZ as of Year 3 is $2.5 million.What is the NPV of this acquisition if the discount rate is 7.1 percent and the acquisition cost is $2.25 million?
A)$538,316
B)$509,482
C)$499,003
D)$506,048
E)$496,399

Question

ABC is considering acquiring XYZ and has compiled this information on XYZ:  The applicable tax rate is 21 percent and the terminal value of XYZ as of Year 3 is $2.5 million.What is the NPV of this acquisition if the discount rate is 7.1 percent and the acquisition cost is $2.25 million?
A)$538,316 
B)$509,482 
C)$499,003 
D)$506,048 
E)$496,399

Quizplus · Accepted Answer

The Answer of ABC is considering acquiring XYZ and has compiled this information on XYZ:  The applicable tax rate is 21 percent and the terminal value of XYZ as of Year 3 is $2.5 million.What is the NPV of this acquisition if the discount rate is 7.1 percent and the acquisition cost is $2.25 million?
A)$538,316 
B)$509,482 
C)$499,003 
D)$506,048 
E)$496,399

ABC Is Considering Acquiring XYZ and Has Compiled This Information