Obviously the easiest and most error-free way of doing this is in Excel. Thus, we get the following table for the NPV calculation.


NPV (1-5)


Total NPV


Google should accept the project, because it has a positive net present value. All projects with a positive net present value add to shareholder wealth. Unless there is a comparison between two mutually exclusive projects, any project with a positive NPV should be accepted. In Google's case, given how much cash it has, it is hard to imagine that this project would be mutually exclusive to another.

How Acquisitions Work

The argument for an acquisition is that the purchasing company feels that the combined value of the two firms is greater than the sum of the parts. The first assumption is that markets are efficient, such that the stock price of Groupon reflects the expected present value of its...
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