Determine the approximate net present value

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Question: Pearson Connection, Inc. is considering the acquisition of Jones & Bartlett Inc. (J&B) for $1.5 million in cash. J&B has short-term liabilities of $500,000. As a result of acquiring J&B Pearson Connections, Inc. would acquire the copyrights to a widely used virtual textbook which would provide $300,000 in estimated cash flow per year for each of the next five years. The Pearson has a cost of capital of 20 percent.
1) Determine the approximate net present value of this acquisition.

2) How would this amount be used in a purchase for cash? Purchase for stock?

Reference no: EM131495718

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