Prior law had restricted the ability of acquirers to credits

Assignment Help Financial Management
Reference no: EM13928099

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 $74 billion in tax loss carry forwards. If Fargo Bank is expected to generate taxable income of $11 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: EM13928099

Questions Cloud

Case study regarding the southwest airlines : Read Case 10: Southwest Airlines.  Answer questions 1-4 in a three to five page APA style paper, and supported with the concepts outlined in your text and from your previous classes.
Considered when formulating a working capital funding policy : Explain, with examples, the key factors to be considered when formulating a working capital funding policy?
Discuss how the different types of non-financial : Discuss how the different types of non-financial, ethical and environmental issues might influence the objective of maximizing shareholders’ wealth by companies.
Evaluate your ability to absorb and synthesize content : Having you write about the information you have encountered through the magnitude of required reading in the doctoral program is a method that allows professors to effectively evaluate your ability to absorb and synthesize content
Prior law had restricted the ability of acquirers to credits : 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).
What rate of return per quarter are you being offered : Suppose an investment offers to triple your money in 48 month What rate of return per quarter are you being offered?
Array machine will enable hospital to perform autoimmunity : An equipment acquisition proposal was being considered by a large health care organization. The array machine will enable the hospital to perform autoimmunity tests (for immunoglobulin’s G, M, and A and complements C3 and C4) in-house rather than sen..
Why clinical interview the foundation of all clinical work : Paper details: Why is the clinical interview the foundation of all clinical work in counseling? How does the clinical interview interface with the therapeutic process
What is dickinsons view of death : Describe how the concept of reason was applied during the Enlightenment. How does Tartuffe reflect these ideas and how does Swift apply his satiric message about human nature and reason?

Reviews

Write a Review

Financial Management Questions & Answers

  Construct brandywines 2011 income statement

Construct Brandywine's 2011 income statement - what were Brandywine's net income, total profit margin, and cash flow?

  Investors anticipate-what is the current stock price

One year from today, investors anticipate that Groningen Distilleries, Inc, stock will pay a dividend of $3.25 per share. After that, investors believe that the dividend will grow at 20% per year for three years before settling down to a long-run gro..

  Purchase of common stock whose historical beta

You are considering the purchase of a common stock whose historical beta is .5. What rate of return should you require from this stock if the current risk free rate of return is 4% and the expected return on an average investment in the market is 11%..

  The firms cost of capital

The capital budgeting director of Spar Corporation is evaluating a project which costs $280,000, is expected to last for 10 years and produce after-tax cash flows, including depreciation, of $42,500 per year. As soon as the project ends, we will sell..

  What was the capital gains yield

Suppose a stock had an initial price of $80 per share, paid a dividend of $1.35 per share during the year, and had an ending share price of $87. What was the capital gains yield?

  Analysts expect cash flows and dividends of the firm

Company "A" just paid a $1.30 dividend and analysts expect cash flows and dividends of the firm to grow at 20 percent for the next two years, 15 percent for the following two years and 6 percent annually afterwards. Stocks of this risk have required ..

  Value is always based on the future cash flows

Roxanne invested $520,000 in a new business 3 years ago. The business was expected to bring in $8,000 each month for the next 25 years (in excess of all costs). The annual cost of capital (or interest rate) for this type of business was 4% with month..

  Forced to buy the underlying stock-lower volatility results

If you __________, then you may be forced to buy the underlying stock. Lower volatility results in __________ Put Option prices and ______ Call Option Prices.

  Force dividends to grow at the long-run growth rate

Boehm Corporation has had stable earnings growth of 8% a year for the past 10 years and in 2013 Boehm paid dividends of $2.6 million on net income of $9.8 million. Calculate Boehm’s total dividends for 2014 under each of the following policies: 1. (a..

  Agreement included a clause excusing safe storage

Sarah entered into a written contract with Safe Storage, Inc. The agreement included a clause excusing Safe Storage, Inc. from any liability for loss or damage, even if the loss or damage resulted from Safe Storage's negligent acts. Sarah signed the ..

  Expected return and standard deviation of variance portfolio

The stock of Bruin, Inc., has an expected return of 14 percent and a standard deviation of 42 percent. The stock of Wildcat Co. has an expected return of 12 percent and a standard deviation of 57 percent. calculate the expected return and standard de..

  What is the net income for firm

Lifeline, Inc., has sales of $590,000, costs of $268,000, depreciation expense of $68,500, interest expense of $35,500, and a tax rate of 40 percent. Required: What is the net income for this firm?

Free Assignment Quote

Assured A++ Grade

Get guaranteed satisfaction & time on delivery in every assignment order you paid with us! We ensure premium quality solution document along with free turntin report!

All rights reserved! Copyrights ©2019-2020 ExpertsMind IT Educational Pvt Ltd