Positron Corporation (POSC)

[Planet Pluto]

You do understand that at $3, a company would need to pony up over $1 billion, right? Here's a simple NPV calculation that shows that even if the acquiring company generated $100 million a year in revenues for the next 20 YEARS, it still wouldn't be worth it. Discount rate is 3%.

Discount Rate: % 3
Life of Project: 20 years
Initial Cost: -$1,000,000,000
Cash flow 1: $100,000,000 per year
Cash flow 2: $100,000,000 per year
Cash flow 3: $100,000,000 per year
Cash flow 4: $100,000,000 per year
Cash flow 5: $100,000,000 per year
Cash flow 6: $100,000,000 per year
Cash flow 7: $100,000,000 per year
Cash flow 8: $100,000,000 per year
Cash flow 9: $100,000,000 per year
Cash flow 10: $100,000,000 per year


Net Present Value: -$146,979,716.32
PV of Expected Cash flows: $853,020,283.68


Interpretation:

With a discount rate of 3.00% and a span of 20 years, your projected cash flows are worth $853,020,283.68 today, which is less than the initial $1,000,000,000.00 paid in order to begin. The resulting NPV of the above project is -$146,979,716.32, which means you will not receive the required return at the end of the project--pursuing the above project may not be an optimal decision.