A Tax Loss Carryforward of $1,000,000 for Company ZZZ Is

question 45

True/False

A tax loss carryforward of $1,000,000 for company ZZZ is not usually worth $1,000,000 in present value to a firm that might acquire company ZZZ.

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Definitions:

Market Consensus Value

The average value or price of a security as agreed upon by market participants, often considered as the most probable price in the marketplace.

Required Return

The minimum annual percentage earned by an investment that will induce individuals or companies to put money into a particular security or project.

Expected Growth Rate

The annual rate at which an investment, company revenue, or economy is expected to grow over a future period.

Rate of Return

The achievement or shortfall in value of an investment during an established time, shown as a percentage of the investment’s original financial input.