RiverRocks, whose WACC is 12.1%, is considering an acquisition of Raft Adventures (whose WACC is 15.9%)....

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RiverRocks, whose WACC is 12.1%, is considering an acquisition of Raft Adventures (whose WACC is 15.9%). The purchase will co

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Answer 1

Answer #1

Hello Sir/ Mam

YOUR REQUIRED ANSWER IS NPV = $84.09m

Given that:

Inflows are :

First Year = 15.3$m and 3.9% growth foreever.

Hence,

PV of inflows = $15.3m/12.1%-3.9% = $186.59m

Hence,

NPV = $186.59m - $102.5m = $84.09m

I hope this solves your doubt.

Feel free to comment if you still have any query or need something else. I'll help asap.

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Answer 2

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