John decided to purchase a firm which is expected to generate net cash flows of $5,000 one year from now, $2,000 at the end of each of the next five years and a $10,000 in seven years from now....

Extracted text: John decided to purchase a firm which is expected to generate net cash flows of $5,000 one year from now, $2,000 at the end of each of the next five years and a $10,000 in seven years from now. Investments of similar characteristics and risk in the market have a discount rate of 10%. (a) Determine the value of the firm. (b) What is the incremental value (NPV) of this acquisition if the initial investment made by John is $12,000? (15) (10) Note: Show your answers in tables and all calculations properly presented.