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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
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 doesn't 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 . Use Appendix A and AppendixB. Required: a. Prepare a Restructured transaction. b. What is the effect on the NPV of the restructured transaction? Complete this question by entering your answers in the tabs below. Prepare a Restructured transaction. Note: Cash outflows and negative amounts should be indicated by a minus sign. Round discount factors to 3 decimal places. Round intermediate calculations and final answers to the nearest whole dollar amount
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