In September $2008,$ the IRS changed tax laws to allow banks to utilize the tax loss carryforwards of banks they acquire

to shield up to $100\%$ of their future income from taxes $($prior law restricted the ability of acquirers to use these credits$).$

Suppose Fargo Bank acquired Covia Bank and with it acquired $$58$ billion in tax loss carryforwards. If Fargo Bank was

expected to generate taxable income of $$8$ billion per year in the future, and its tax rate was $30\%,$ what was the present

value of these acquired tax loss carryforwards given a cost of capital of $8\%?$ How would the present value change under

current law which restricts the amount of the deduction to $80\%$ of pre$-$tax income?

If Fargo Bank was expected to generate taxable income of $ $8$ billion per year in the$$ future, and its tax rate was $30\%,$ what was the present value of these acquired tax loss carryforwards given a cost of capital of $8\%?$

The present value of these acquired tax loss carryforwards is $$$

$$

billion $($Round to two decimal$$ places.$)$

Part $2$

How would the present value change under current law which restricts the amount of the deduction to $80\%$ of$$ pre$-$tax income?

The present value of these acquired tax loss carryforwards is $$$

$$

enter your response here billion.