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Hahn Textiles has a tax loss carryforward of $ 8 0 0 comma 0 0 0 . Two firms are interested in acquiring Hahn for

Hahn Textiles has a tax loss carryforward of $ 800 comma 000. Two firms are interested in acquiring Hahn for the tax loss advantage. Reilly Investment Group has expected earnings before taxes of $ 200 comma 000 per year for each of the next 7 years and a cost of capital of 15.5%. Webster Industries has expected earnings before taxes for the next 7 years as shown in the following table, LOADING.... Both Reilly's and Webster's expected earnings are assumed to fall within the annual limit legally allowed for application of the tax loss carryforward resulting from the proposed merger. Webster has a cost of capital of 15.5%. The corporate tax rate is 21%.

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