1216. Target Company has incurred $5 million in losses during the past three years. Acquiring Company anticipates

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12–16. Target Company has incurred $5 million in losses during the past three years.

Acquiring Company anticipates pretax earnings of $3 million in each of the next three years. What is the difference between the taxes that Acquiring Company would have paid before the merger as compared to actual taxes paid after the merger? Show your work.

Answer: $2 million.

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