The Clark Corp desires to expand. It is considering a cash purchase of Kent enterprises for $3 million. Kent has a $700,000 tax loss carryforard that could be used immediately by the Clark Corporation, which is paying taxes at the rate of 30%. Kent will provide $420,000 per year in cash flow (aftertax income plus depreciation) for the next 20 years. If the Clark Corp has a cost of capital of 13%, should the merger be undertaken?© BrainMass Inc. brainmass.com October 10, 2019, 12:21 am ad1c9bdddf
PV of cash flows associated with kent = ...
The merger is considered.