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Acquisition of assets for cash knab corporation is

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Acquisition of Assets for Cash. Knab Corporation is considering acquiring Deerson Corporation for $40,000. Deerson has liabilities of $62,000. Deerson has machinery that Knab wants, and the remaining assets would be sold for $55,000. The machinery will furnish Knab with an increase in annual cash flow of $7,000 for the next 10 years. The cost of capital is 12 percent.

(a) What is the net cost of the machinery?

(b) Should the acquisition be made?

Reference no: EM13573911

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