Top Posters
Since Sunday
5
a
5
k
5
c
5
B
5
l
5
C
4
s
4
a
4
t
4
i
4
r
4
Home Q & A Board Other Fields Homework Help Business Management
New Topic  
pompa pompa
wrote...
Go to Answer
Posts: 997
Rep: 0 0
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 of $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? Calculate the net value of a second alternative that would allow Tangshan to purchase a better quality asset for $12,000,000 that would provide a $2,600,000 in after-tax inflows for the next 5 years. Which alternative would you choose?
A) $1,795,700, $3,284,400, both
B) $1,500,000, $4,500,000, both
C) ($1,795,700), ($3,284,400), neither
D) ($1,795,700), ($4,500,000), neither
Textbook 
Principles of Managerial Finance

Principles of Managerial Finance


Edition: 14th
Authors:
Read 348 times
2 Replies
Replies
Answer verified by a subject expert
alovelyalovely
wrote...
#1
Top Poster
Posts: 958
Rep: 50 0
7 years ago
Sign in or Sign up in seconds to unlock everything for free
More solutions for this book are available here
1
"It is better to fail in originality than to succeed in imitation."

Related Topics

wrote...
#2
2 years ago
TY
New Topic      
Quick Reply
Explore
Post your homework questions and get free online help from our incredible volunteers
  1242 People Browsing
Start New Topic Take the Tour CoursesNew Study Tools Topics Trending Browse by Textbook
Related Images
  
 364
  
 1015
  
 214
Your Opinion
Who will win the 2024 president election?
Votes: 3
Closes: November 4
Previous poll results: How often do you eat-out per week?