Will the tax benefits be diminished as a consequence

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Reference no: EM13924980

TNG Corporation is a manufacturing company, which has accumulated an net operating loss of $ 2 billion over time. It is considering borrowing $ 5 billion to acquire another company.

a. Based upon the corporate tax rate of 36%, estimate the present value of the tax savings that could accrue to the company.

b. Does the existence of a net operating loss carry forward affect your analysis? (Will the tax benefits be diminished as a consequence?)

Reference no: EM13924980

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