13. The ABC Company has a 100% owned subsidiary, the Overpaid Company. ABC had purchased Overpaid for $1 billion in 2020. Between 2020 and 2023, Overpaid did not perform well. ABC decided to sell Overpaid for $500 million. You have the following data: ABC basis in stock of Overpaid $1 billion Inside basis of Overpaid net assets $200 million ABC income tax rate on ordinary and capital gains 25% Any gains from the sale are immediately taxable Any losses from the sale can be used to offset income in one year ABC has an annual cost of capital of 14%

a. What is the present value of the after-tax cash benefit ABC will receive from selling the stock of Overpaid?

b. What is the present value of the after-tax cash benefit ABC will receive from selling the net assets of Overpaid?