document.write( "<A HREF=/cgi-bin/jump-to-question.mpl?question=1136369>Question 1136369</A>: <I><SPAN STYLE=\"word-break: break-all;\"> You are the General Manager at the Bicker, Slaughter, and Lynch Law Firm. There is an opportunity to buy<BR>\n" );
document.write( "out a small law firm that was just started by a young MBA/JD, and you believe the firm can be grown and<BR>\n" );
document.write( "become a lucrative part of your Firm. With help from your finance leader, you have estimated the following<BR>\n" );
document.write( "benefit streams for this new division: <BR>\n" );
document.write( "• You estimate that the purchase price for this firm would be $200,000 and that additional net working<BR>\n" );
document.write( "capital would be needed in the amount of $60,000 in year 0, an additional $15,000 in year 2 and then<BR>\n" );
document.write( "$15,000 in year 5.<BR>\n" );
document.write( "• BSL usually spend about $275,000 per year in advertising. If you make this acquisition, you would<BR>\n" );
document.write( "ask that advertising spending be increased by an incremental one-time amount of $50,000 in year 0<BR>\n" );
document.write( "to publicize the firm’s expansion.<BR>\n" );
document.write( "• Your finance leader has indicated that the firm has access to a credit line and could borrow the funds<BR>\n" );
document.write( "at a rate of 6%. He also mentions that when he runs project economics for capital budgeting (such<BR>\n" );
document.write( "as a new copier or a company car), he recommends a standard 10% rate discount, but the one other<BR>\n" );
document.write( "time they looked at an acquisition of a smaller firm, he used a 12% rate discount. Obviously you will<BR>\n" );
document.write( "want to select the most appropriate discount rate for this type of project.<BR>\n" );
document.write( "• At the end of 8 years, the plan is to sell this division. The estimated terminal value (the sale and the<BR>\n" );
document.write( "return of working capital) is conservatively estimated to be $400,000 of after-tax cash flow help. </SPAN>\n" );
document.write( "</I><HR><TABLE width=100%><TR><TD><B><A HREF=http://www.algebra.com/>Algebra.Com's</A> Answer #754131 by </B><A HREF=/tutors/aboutme.mpl?userid=ikleyn><B>ikleyn(52781)</B></A><img src=\"/images/stars/stars-13.gif\" alt=\"\" >&nbsp;<A HREF=/tutors/aboutme.mpl?userid=ikleyn><IMG SRC=http://www.algebra.com/images/aboutme-small.gif BORDER=0 alt=\"About Me\" VALIGN=MIDDLE></A>&nbsp;<IMG SRC=http://www.algebra.com/cgi-bin/show-face.mpl?user=ikleyn><BR>You can <A HREF=\"/cgi-bin/embed-solution.mpl?show=1&solution=754131\">put this solution on YOUR website!</A><BR><SPAN STYLE=\"word-break: break-all;\"> .\r<BR>\n" );
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document.write( "I read attentively your post once - and did not find any question in it.\r<BR>\n" );
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document.write( "Then I read your post even more attentively for the second time - and did not find any question again.\r<BR>\n" );
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document.write( "So, I do not understand for what reason it was submitted to the forum.\r<BR>\n" );
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document.write( "Written in perfect English, it has no any Math sense and has no any reason to be posted to this forum.\r<BR>\n" );
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document.write( "You simply stole my time.\r<BR>\n" );
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document.write( " </SPAN>\n" );
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