Tax benefits and price Hahn Textiles has a tax loss carryforward of $802,000 Two firms are interested in acquiring Hahn for the tax loss advantage. Reilly Investment Group has expected earnings before taxes of $200,500 per year for each of the next 7 years and a cost of capital of 14.9% Webster Industries has expected earnings before taxes for the next 7 years as shown in the following tablo, 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 14.9% Both firms are subject to a 38% tax rate on ordinary income 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 S (Round to the nearest dollar) i Data Table (Click on the icon located on the top-right corner of the data table below in order to copy its contents into a spreadsheet.) Year Webster Industries Earnings before taxes $79,000 $120,000 $202.000 $300,000 $400,000 $399,000 $499,000 Enter your answer in 16 parts Check Answer Print Dan