In: Accounting
Toni's Typesetters is analyzing a possible merger with Pete's Print Shop. Toni's has a tax loss carryforward of $ 400,000, which it could apply to Pete's expected earnings before taxes of $200,000 per year for the next 5 years. Using a 38 % tax rate, compare the earnings after taxes for Pete's over the next 5 years both without and with the merger.
Without the merger, Pete's Print Shop's earnings after taxes in years 1 through 5 is $_________ (Round to the nearest dollar.)
With Merger | |||||
years | cash flow | tax loss | profit before tax | tax @38% | earning after tax |
1 | $ 2,00,000.00 | $ 2,00,000.00 | $ 2,00,000.00 | ||
2 | $ 2,00,000.00 | $ 2,00,000.00 | $ 2,00,000.00 | ||
3 | $ 2,00,000.00 | $ 2,00,000.00 | $ 76,000.00 | $ 1,24,000.00 | |
4 | $ 2,00,000.00 | $ 2,00,000.00 | $ 76,000.00 | $ 1,24,000.00 | |
5 | $ 2,00,000.00 | $ 2,00,000.00 | $ 76,000.00 | $ 1,24,000.00 | |
total | $ 7,72,000.00 | ||||
Without Merger | |||||
years | cash flow | tax loss | profit before tax | tax @38% | earning after tax |
1 | $ 2,00,000.00 | $ 2,00,000.00 | $ 76,000.00 | $ 1,24,000.00 | |
2 | $ 2,00,000.00 | $ 2,00,000.00 | $ 76,000.00 | $ 1,24,000.00 | |
3 | $ 2,00,000.00 | $ 2,00,000.00 | $ 76,000.00 | $ 1,24,000.00 | |
4 | $ 2,00,000.00 | $ 2,00,000.00 | $ 76,000.00 | $ 1,24,000.00 | |
5 | $ 2,00,000.00 | $ 2,00,000.00 | $ 76,000.00 | $ 1,24,000.00 | |
total | $ 6,20,000.00 |