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betterway betterway
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7 years ago
Tangshan Mining is considering the acquisition of Zhengsen Mining at a cash price of $6,000,000. The primary motivation for Tangshan's purchase of Zhengsen is for a special piece of drilling equipment that it believes will generate after-tax cash flows if $2,000,000 per year during the next 5 years. Zhengsen Mining has liabilities of $9,000,000 and Tangshan estimates that it can sell the remaining assets $6,500,000. Tangshan 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?
A) $1,795,690
B) $1,500,000
C) ($1,795,690)
D) ($1,500,789)
Textbook 
Principles of Managerial Finance

Principles of Managerial Finance


Edition: 14th
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donnabandonnaban
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Thank you for providing the right answer every time
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a thanks!
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