Alpha Corporation is considering buying Beta Corporation for $2,400,000 cash Beta Corporation has a $600,000 tax loss carry forward that could be used immediately by Alpha Corporation Alpha Corporation pays tax at the rate of 35 Beta Corporation will provide $300,000 per year in cash flow (in after...

Computation of the Present value of the cash flow PV of ...

Alpha Corporation is considering buying Beta Corporation for $2,400,000 cash. Beta Corporation has a $600,000 tax loss

Question:

Alpha is considering buying Beta for $2,400,000 cash. Beta has a $600,000 tax loss carry forward that could be used immediately by Alpha Alpha pays tax at the rate of 35%. Beta will provide $300,000 per year in cash flow (in after tax income plus depreciation) for the next 20 years. If Alpha has a of 11%, should Alpha go forward with the acquisition?

Corporation
A Corporation is a legal form of business that is separate from its owner. In other words, a corporation is a business or organization formed by a group of people, and its right and liabilities separate from those of the individuals involved. It may... Cost Of Capital
Cost of capital refers to the opportunity cost of making a specific investment . Cost of capital (COC) is the rate of return that a firm must earn on its project investments to maintain its market value and attract funds. COC is the required rate of...