A savvy company (or individual) will use the net present value method to help determine the amount it
should spend to acquire another business. For example, assume that you wish to purchase Kirkland Co.
You expect that the Kirkland Co. will generate positive net cash flows after tax of $15,000 per year for
ten years, at which time you plan to liquidate or sell the company for $40,000 after taxes. To cover the
risk associated with your investment in Kirkland Co. you need to earn 14%. With that in mind, what is
the maximum amount you should pay today for Kirkland Co.?