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NEW QUESTION: 1
Tapley Acquisition Inc. is considering the purchase of Target Company. The acquisition would require an initial investment of $190,000, but Tapley's after-tax net cash flows would increase by $30,000 per year and remain at this new level forever. Assume a cost of capital of 15 percent. Should Tapley buy Target?
A. Yes, because the NPV = $30,000.
B. No, because NPV < 0.
C. No, because k > IRR.
D. Yes, because the IRR < the cost of capital.
E. Yes, because the NPV = $10,000.
Answer: E
Explanation:
Explanation/Reference:
Explanation:
NPV = $30,000/0.15 - $190,000 = $200,000 - $190,000 = $10,000.

NEW QUESTION: 2
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C. SAT
D. RAT
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Answer:
Explanation:

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