Firm H has the opportunity to engage in a transaction that will generate $100,000 cash flow (and taxable income) in year 0. How does the NPV of the transaction change if 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 the three-year period. Use Appendix A and Appendix B.

Required:

a. Prepare an Original transaction

b. Prepare a Restructured transaction.

REQUIRED A

	YEAR 0
Before-Tax Cash Flow
Tax Cost
Net Cash Flow
NPV

REQUIRED B

	Year 0	Year 1	Year 2
Before-tax cash flow
Tax Cost
Net Cash Flow
Discount Factor (6%)
Present Value
NPV