Tax benefits and price $-$ Hahn Textiles has a tax loss carryforward of $ $804$ comma $000$$$804,000.$ Two firms are interested in acquiring Hahn for the tax loss advantage. Reilly Investment Group has expected earnings before taxes of $$201,000$ per year for each of the next $7$ years and a cost of capital of $14\mathrm{.}6\%.$ Webster Industries has expected earnings before taxes for the next $7$ years as shown in the following$$ table, Both$$ Reilly's and$$ Webster's expected earnings are assumed to fallwithin the annual limit legally allowed for application of the tax loss carryforward resulting from the proposed merger. Webster has a cost of capital of $14\mathrm{.}6\%.$The corporate tax rate is $21\%.$

a$.$ What is the tax advantage of the merger each year for Reilly?

b$.$ What is the tax advantage of the merger each year for Webster?

c$.$ What is the maximum cash price each interested firm would be willing to pay for Hahn Textiles? $($Hint: Calculate the present value of the tax advantages.$)$

d$.$ Use your answers in parts a through $c$ to explain why a target company can have different values to different potential acquiring firms.

a$.$ Reilly's tax advantage from the acquisition in year $1$ is $

$($Round to the nearest dollar.$)$

Data table

$($Click on the icon here $$ in order to copy the contents of the data table below into a spreadsheet.$)$