How to considering a purchase of company


Company A wants to expand. It is considering a purchase of company B for 3 million dollars. Company B has a $700,000 tax loss carry forward that could be used immediately by company A. , which is paying taxes at 30%. Company B will provide 420,000 per year in cash flow (after tax income plus depreciation) for the next 20 years. If company A has a cost of capital at 13%, should the merger be undertaken?

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Accounting Basics: How to considering a purchase of company
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