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NPV, IRR for a merger

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Two companies are contemplating a merger. The new entity is expected to require an initial investment of $20 million which will then result in expense savings of $2.7 million for 15 years. The weighted average cost of capital is 8%. The firm just issued bonds at 6.5%.

How would we determine the NPV / IRR for this effort.

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The expert calculates NPV and IRR for a merger.

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Two companies are contemplating a merger. The new entity is expected to require an initial investment of $20 million which will then result in expense savings of $2.7 million for 15 years. The weighted average cost of capital is 8%. The firm just issued bonds at 6.5%.

How would we determine the NPV / IRR for this effort.

Since the cash flows are the same over the years (annuity) we can use PVIFA factor to calculate NPV
PVIFA= Present Value Interest Factor for an ...

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