Company G, which has a 35 percent marginal tax rate, owns a controlling interest in Company J,

which has a 15 percent marginal tax rate. Both companies perform engineering services. Company

G is negotiating a contract to provide services for a client. Upon satisfactory completion of the

services, the client will pay $86,000 cash.

Required:

a.

Compute the after-tax cash from the contract assuming that Company G is the party to the

contract and provides the services to the client.

b.

Compute the after-tax cash from the contract assuming that Company J is the party to the

contract and provides the services to the client.

c.

Compute the after-tax cash flow for Company G from the contract assuming that Company J

is the party to the contract, but Company G actually provides the services to the client.