Question: Suppose a firm has a tax loss in the current period of $10 million, which when added to prior tax losses gives it an NOL carryforward of $15 million. The current top statutory tax rate is 35% but is expected to increase to 45% in 2 years. Assume an after-tax discount rate of 10% and future taxable income per annum of $2 million. The firm has a large NOL carryforward. Should the firm undertake clientele-based arbitrage by issuing preferred stock and buying corporate bonds?