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Yes, it is quite reasonable to perform, as it will explain future economic inflow after deducting purchase cost as well as performance strength of acquisition or meger. But there are some inherent demerit of this analysis includes, by passing enviromental factor i.e "PESTAL Analysis" , availablity of sources to run working capital, management synergies (May have positive of negative effect) and etc.
Overall, we can conclude NPV help management in important decision making like acquisistion, introduction of new product line and etc.
Yes we can, for this purpose we can develop a present value model that explain the sources of economic gains that can be attain through mergers. This model identifies major sources of value in mergers, each of these sources can reduce or contribute to the combined wealth effect of takeover deal. The overall value of deal is sum of the impacts of these factors on combined value.
Of course Yes. NPV or Net Present value Analysis is the major way to be used in such capital budgeting decisions like this . To measure such inflows from the project and Outflows as Well and to see the impact and decide what to do.
Yes we can use the NPV
Net Present Value (NPV) Analysis
The methods used to value companies in a merger and acquisitions (Merger and acqustion . It provides a detailed description of the discounted-cash-flow (DCF) approach
other methods of valuation
such as market multiples of peer firms, book value, liquidation value, replacement cost, market value, and comparable transaction multiples.
Yes we can.
