1. 1. Company H has the opportunity to enter into a business that generates $ 100,000 cash flow (which also represents taxable income) in year 0. Given that the company can restructure the business so that the cash flow before tax remains unchanged, and taxable income to be taxed beginning in year 1 ($ 50,000) and year 2 ($ 50,000), highlight how the NPV changes if firm H uses a 10% discount rate and pays a 34% tax in each of the 3 years .

2. Company R has signed a contract committing to carry out a transaction that will generate total cash flows of $ 360,000. Cash flows will represent income in the year in which they are collected and will be taxed at 35%. Company R will receive $ 200,000 in year 0 and $ 160,000 in year 1. The contract partner wants to restructure the transaction so that the total cash flows are $ 375,000 ($ 215,000 in year 0 and $ 160,000 in year 1). Under these conditions, company R will recognize the full amount of $ 375,000 as taxable in year 0. Given that company R uses an 8% discount rate, should it accept or reject the restructuring of the transaction?