What is the present value of these acquired tax loss

Assignment Help Financial Management

Reference no: EM13918412

In September, 2008, the IRS changed tax laws to allow banks to utilize the tax loss carry forwards of banks they acquire to shield their future income from taxes (prior law had restricted the ability of acquirers to use these credits). Suppose Fargo Bank acquired Covia Bonk and with it acquires $90 billion in tax loss carry forwards. If Fargo Bank is expected to generate taxable income of $15 billion per year in the future, and it tax rate is 30%, what is the present value of these acquired tax loss carry forwards given a cost of capital of 8%?

Reference no: EM13918412

Questions Cloud

Reliant on large amounts of data for making : Businesses today are extremely reliant on large amounts of data for making intelligent business decisions. Likewise, the data warehouses are often structured in a manner that optimizes processing large amounts of data.

Find the value of a european put option : Toyohashi Co common stock has market price $85 per share and its sigma is 0.30. Find the value of a European put option, with an exercise price of $75 and expiring after 110 days, on the Toyohashi stock. The riskless rate is 3.5%

Compare the assumptions underlying arbitrage pricing theory : Compare the assumptions underlying Arbitrage Pricing Theory with those underlying the mean-variance Capital Asset Pricing Model. Which set of assumptions seems more realistic to you? Why?

Consider dividend policy-stock repurchases and stock splits : Consider dividend policy, stock repurchases, and stock splits. Discuss how investors may react differently if their company issues dividends or announces a stock split or stock repurchase. Feel free to include examples to illustrate your point.

What is the present value of these acquired tax loss : In September, 2008, the IRS changed tax laws to allow banks to utilize the tax loss carry forwards of banks they acquire to shield their future income from taxes. what is the present value of these acquired tax loss carry forwards given a cost of cap..

Capital appreciation and dividend income : Year1 stock price 60 year 2 stock price 62 year 3 stock price 56 year 4 stock price 50 year 5 stock price 62 year 6 stock price 72. a. Use time series analysis, for cast the stock price for year 8. b. Assume a dividend of $2.5/share, compute the tota..

Recognized cost of goods sold under fifo : Cathy's Catering experienced the following independent events:

Beat the earnings forecasts of wall street stock analysts : Ethics Problem: During the 1990s, General Electric put together a long string of consecutive quarters in which the firm managed to meet or beat the earnings forecasts of Wall Street stock analysts. How do you think GE’s long run of meeting or beating..

What is the payback period for the investment project : Superlink Inc. is considering an investment that has the following cash flows: What is the payback period for the investment project? What is the project's NPV if the firm's cost of capital is 12%?

User Account

All Pages