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Angelo Jazz Aniel Angelo Jazz Aniel
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2 weeks ago
Bronze Mining is considering the acquisition of Copper Mining at a cash price of P6,000,000.  The primary motivation for Bronze’s purchase of Copper is for a special piece of drilling equipment that it believes will generate an after-tax cash flow of P2,000,000 per year during the next 5 years.  Copper Mining has liabilities of P9,000,000 and Bronze estimates that it can sell the remaining assets P6,500,000.  Bronze will use a 15 percent cost of capital for evaluating the acquisition.  Based on this information, what is the net value of the special drilling equipment? Round-off your PV factor to six decimal places.
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Educator
2 weeks ago
I found a similar question with a complete solution.

Question:



Solution:

*attached

Hope this helps
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