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10
points J & J Enterprises is considering a cash acquisition of Patterson Steel Company for $4,200,000. Patterson will provide the following
pattern of cash inflows and synergistic benefits for the next 20 years. There is no tax loss carryforward. Use Appendix D as an
approximate answer, but calculate your final answer using the formula and financial calculator methods. Years 1—5 6—15 16—20
Cash inflow (aftertax) $460,000 $620,000 $820,000
Synergistic benefits (aftertax) 42,000 62,000 72,000 The cost of capital for the acquiring firm is 11 percent. 3. Compute the net present value. (Negative amount should be indicated by a minus sign. Do not round intermediate calculations.
Round your answer to 2 decimal places.) 6 Answer is complete but not entirely correct. Net present value $ 418,820.00 6 b. Should the merger be undertaken? ' Yeso No

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