Q-18-4

A) effective cost 85000

B) 1 2
-85000 20000

NPV ###
NPV is greater than zero, Go for merge

C) 1 2
-120000 26000

NPV 15619.01
Here NPV of acquisition is more compare to purchasee a press. Go for acquisition
 3 4 5 6 7 8 9 10 11
20000 20000 20000 20000 20000 20000 20000 20000 20000

r than zero, Go for merger

3 4 5 6 7 8 9 10 11
26000 26000 26000 26000 26000 26000 26000 26000 26000

for acquisition
Q-18-5
1 2
A) 25000.00 25000.00
0.00 0.00
for first 5 83803.88
next 5 yea 83330.6763921414
Total prese 167134.55
Cost acqisi 125000.00
NPV 42134.55
NPV is positive acqiusion is recommanded

B) 1 2
40000.00 40000.00
Total prese 226008.92
cost acquis 125000.00
NPV 101008.92
The euipment purchase is recommended.

C) 1 2
25000.00 25000.00
0.00 0.00
first 5 year present cashflow90119.41
Last 5 year present cash flow
102272.34
total present cash flow 192391.75
Cost acqisition 125000.00
NPV 67391.75
My reccomondation would not change, AS in these case also NPV
 3 4 5 6 7 8 9 10
25000.00 25000.00 25000.00 0.00 0.00 0.00 0.00 0.00
0.00 0.00 0.00 50000.00 50000.00 50000.00 50000.00 50000.00

3 4 5 6 7 8 9 10
40000.00 40000.00 40000.00 40000.00 40000.00 40000.00 40000.00 40000.00

3 4 5 6 7 8 9 10
25000.00 25000.00 25000.00 0.00 0.00 0.00 0.00 0.00
0.00 0.00 0.00 50000.00 50000.00 50000.00 50000.00 50000.00

ange, AS in these case also NPV of New purchase is greather than acquisition
Q-18-8

A) 8000.00 New share

B) 4.31 per share
C) 1.72 per share
D) 4.31 per share
Q-18-11

A) 1.13
EPS P/E
B) Henry 2.50 18.00
Mayer 3.33 15.00

C) 56.25 Acquire company do for target

16.88

D) 18750
108750
2.528736

E) 45.51724 new market price