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Compute the net present value

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Question - The Clark Corporation desires to expand. It is considering a cash purchase of Kent Enterprises for $4.2 million. Kent has a $930,000 tax loss carryforward that could be used immediately by the Clark Corporation, which is paying taxes at the rate of 40 percent. Kent will provide $530,000 per year in cash flow (after tax income plus depreciation) for the next 10 years. The discount rate is 8 percent. Compute the net present value.

Reference no: EM133117390

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