The Clark Corporation desires to expand. It is considering a cash purchase of Kent Enterprises...
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The Clark Corporation desires to expand. It is considering a cash purchase of Kent Enterprises for $3.5 million. Kent has a $860,000 tax loss carryforward that could be used immediately by the Clark Corporation, which is paying taxes at the rate of 35 percent. Kent will provide $460,000 per year in cash flow (aftertax income plus depreciation) for the next 25 years. The discount rate is 13 percent. Use Appendix D as an approximate answer but calculate your final answer using the formula and financial calculator methods.
The Clark Corporation desires to expand. It is considering a cash purchase of Kent Enterprises for $3.5 million. Kent has a $860,000 tax loss carryforward that could be used immediately by the Clark Corporation, which is paying taxes at the rate of 35 percent. Kent will provide $460,000 per year in cash flow (aftertax income plus depreciation) for the next 25 years. The discount rate is 13 percent. Use Appendix D as an approximate answer, but calculate your final answer using the formula and financial calculator methods. a. Compute the net present value. Note: Negative amount should be indicated by a minus sign. Do not round intermediate calculations. Round your final answer to 2 decimal places
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calculate your final answer using the formula and financial calculator methods.