Lawn.com is expected to have operating losses of $329,300 in its first year of business and $293,400 in its second year. However, the company expects to have income before taxes of $374,400 in its third year and $589,300 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 $ 189641

FINANCIAL ACCOUNTING
10th Edition
ISBN:9781259964947
Author:Libby
Publisher:Libby
Chapter1: Financial Statements And Business Decisions
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Lawn.com is expected to have operating losses of $329,300 in its first year of business and $293,400 in its second year. However, the
company expects to have income before taxes of $374,400 in its third year and $589,300 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
$
+A
189641
Transcribed Image Text:Lawn.com is expected to have operating losses of $329,300 in its first year of business and $293,400 in its second year. However, the company expects to have income before taxes of $374,400 in its third year and $589,300 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 $ +A 189641
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