Hard Corporation Has Net Assets Valued at $900,000 and an NOL

question 22

Multiple Choice

Hard Corporation has net assets valued at $900,000 and an NOL of $450,000.On January 3 of the current year,Hard is acquired by Soft Corporation in a restructuring qualifying as a tax-free reorganization that causes an ownership shift of 80 percentage points for the Hard shareholders.Soft uses a calendar year for tax purposes.Assuming that the long-term tax-exempt rate is 5%,what is the maximum amount Soft should be willing to pay Hard for its NOL,if Soft uses a 10% discount factor (which is 6.145) for this decision?

• A)$450,000.
• B)$276,525.
• C)$138,263.
• D)$191,565.
• E)None of the above.

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Definitions:

Demand Pay

Compensation determined by the desirability or demand for specific job skills in the labor market.

More Elastic

Refers to a greater sensitivity or responsiveness of the quantity demanded or supplied to changes in price, indicating a more noticeable shift in consumer or producer behavior in response to price fluctuations.

Senior Citizens

Individuals typically aged 65 and over who may qualify for certain benefits and considerations due to their age.

Bus Service

A form of public transportation that operates with a set schedule and route, providing transportation services to passengers.