Base your recommendation on the net present value of outlay

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Reference no: EM131535544

Cautionary? Tales, Inc., is considering the acquisition of Danger Corp. at its asking price of ?$170,000. Cautionary would immediately sell some of? Danger's assets for ?$17,000 if it makes the acquisition. Danger has a cash balance of ?$1,700 at the time of the acquisition. If Cautionary believes it can generate? after-tax cash inflows of $20,000 per year for the next 7 years from the Danger? acquisition, should the firm make the? acquisition? Base your recommendation on the net present value of the outlay using? Cautionary's 8?% cost of capital.

Reference no: EM131535544

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