Firm H has the opportunity to engage in a transaction that will generate $100,000 cash flow (and taxable income) in year 0. The firm could restructure the transaction in a way that doesnt change before-tax cash flow but results in no taxable income in year 0, $50,000 taxable income in year 1, and the remaining $50,000 taxable income in year 2. Assume a 6 percent discount rate and a 21 percent marginal tax rate for years 0 and 1, and a 30 percent rate for year 2.

Required: a.Prepare a Restructured transaction.

b. What is the effect on the NPV of the restructured transaction?