Present Value Tables Needed for This Question

question 7

Essay

Present Value Tables needed for this question.Hair Corporation would like to acquire Scalp Corporation on August 31 because Scalp has an $8,000 capital loss carryover and $32,200 of general business credits that Hair could readily use.At this time,Scalp has assets valued at $1 million (basis of $1.1 million).While Hair is not interested in having Scalp's shareholders become its shareholders,it is interested in expanding into Scalp's business line.Hair thinks it could turn Scalp around with up-to-date equipment.Thus,Hair would like to sell Scalp's assets immediately,recognize the loss to offset its expected gains,and then use the proceeds to purchase new equipment.Hair is a very profitable corporation and is also expecting to have at least $50,000 of capital gains and $3 million in other income for the current year.Hair is proposing paying cash for all of Scalp's assets and liabilities.The Federal long-term tax-exempt rate is currently 3%,and Hair's discount factor for making investment decisions is 15%.

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