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What is the net cost of machinery

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Knab Corp.is considering acquiring Deerson Corp. for Php400,000. Deerson has liabilities of Php62,000. Deerson has machinery that Knab wants, and the remaining assets would be sold for Php55,000. The machinery will furnish Knab with an increase in annual cash flow of Php7,000 for the next 10 years. The cost of capital is 12%

Question (a) What is the net cost of Machinery

Question (b) Should the acquisition be made?

Reference no: EM132519657

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