Assume that you are trying to estimate the after-tax operating income for a firm with $ 1 billion in net operating losses carried forward. This firm is expected to have operating income of $ 500 million each year for the next 3 years, and the marginal tax rate on income for all firms that make money is 40%. Estimate the after-tax operating income each year for the next 3 years.

Year 1 Year 2 Year 3

EBIT 500 500 500

Taxes

EBIT (1-t)

Tax rate