RiverRocks (whose WACC is 12.3%) is considering an acquisition of Raft Adventures (whose WACC is 14.8%). The purchase will cost $102.8 million and will generate cash flows that start at $15.7 million in one year and then grow at 3.6% per year forever. What is the NPV of the acquisition? The net present value of the project is $ million. (Round to two decimal places.)

EBK CONTEMPORARY FINANCIAL MANAGEMENT
14th Edition
ISBN:9781337514835
Author:MOYER
Publisher:MOYER
Chapter23: Corporate Restructuring
Section: Chapter Questions
Problem 11P
Question
RiverRocks (whose WACC is 12.3%) is considering an acquisition of Raft Adventures (whose WACC is 14.8%). The
purchase will cost $102.8 million and will generate cash flows that start at $15.7 million in one year and then grow at
3.6% per year forever. What is the NPV of the acquisition?
The net present value of the project is $
million. (Round to two decimal places.)
Transcribed Image Text:RiverRocks (whose WACC is 12.3%) is considering an acquisition of Raft Adventures (whose WACC is 14.8%). The purchase will cost $102.8 million and will generate cash flows that start at $15.7 million in one year and then grow at 3.6% per year forever. What is the NPV of the acquisition? The net present value of the project is $ million. (Round to two decimal places.)
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