Marketing Concepts, Inc

Multiple Choice

Marketing Concepts, Inc. is considering the acquisition of Management Theories, Inc. at a cashprice of $1.5 million. Management Theories, Inc. has short?term liabilities of $500,000. As a resultof acquiring Management Theories, Inc., Marketing Concepts, Inc. would acquire the copyrights to a national best?seller which would provide an estimated cash flow of $300,000 for the next five years. The firm has a cost of capital of 20 percent. The approximate net present value of this acquisition is

A) -$1,102,700.
B) $480,800.
C) -$102,700.
D) $500,000.