TNG Corporation is a manufacturing company, which has acccumulated an net operating loss of $3 billion over time. It is considering borrowing $ 5 billion to acquire another company.

a. Based upon the corporate tax rate of 25%, estimate the present value of the tax savings that could accrue to the company.

b. Does the existence of a net operating loss carry forward affect your analysis? (Will the tax benefits be diminished as a consequence?)