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As a financial analyst, you have to evaluate two firms, Salma & Co and Ahmad & Co. Both companies will either make $30 million or
As a financial analyst, you have to evaluate two firms, Salma & Co and Ahmad & Co. Both companies will either make $30 million or lose $10 million every year with equal probability. The companies' profits are perfectly negatively correlated. Calculate the expected after-tax profits of Salma & Co. in any year, assuming a corporate tax rate of 35% and no tax loss carry back or carry forward.
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