Lawn.com is expected to have operating losses of $325,100 in its first year of business and $278,100 in its second year. However, the company expects to have income before taxes of $372,000 in its third year and $700,800 in its fourth year. The company's required rate of return is 10 percent. Assume a tax rate of 35 percent and that current losses can be used to offset taxable income in future years. Click here to view factor tables What is the present value of tax savings related to the operating losses in years 1 and 2? (Round present value factor calculations to 4 decimal places, e.g. 1.2151 and final answer to O decimal places, e.g. 125. Enter negative amounts using either a negative sign preceding the number e.g. -45 or parentheses e.g. (45).) Present value $ 183879 Ε
Lawn.com is expected to have operating losses of $325,100 in its first year of business and $278,100 in its second year. However, the company expects to have income before taxes of $372,000 in its third year and $700,800 in its fourth year. The company's required rate of return is 10 percent. Assume a tax rate of 35 percent and that current losses can be used to offset taxable income in future years. Click here to view factor tables What is the present value of tax savings related to the operating losses in years 1 and 2? (Round present value factor calculations to 4 decimal places, e.g. 1.2151 and final answer to O decimal places, e.g. 125. Enter negative amounts using either a negative sign preceding the number e.g. -45 or parentheses e.g. (45).) Present value $ 183879 Ε
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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Transcribed Image Text:Lawn.com is expected to have operating losses of $325,100 in its first year of business and $278,100 in its second year. However, the
company expects to have income before taxes of $372,000 in its third year and $700,800 in its fourth year. The company's required
rate of return is 10 percent.
Assume a tax rate of 35 percent and that current losses can be used to offset taxable income in future years.
Click here to view factor tables
What is the present value of tax savings related to the operating losses in years 1 and 2? (Round present value factor calculations to 4
decimal places, e.g. 1.2151 and final answer to O decimal places, e.g. 125. Enter negative amounts using either a negative sign preceding the
number e.g. -45 or parentheses e.g. (45).)
Present value
$
183879
Ε
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