Present Value Tables needed for this question.Avocado Corporation wants to acquire Tomato Corporation because their businesses are complementary and Tomato has unused business credits of $63,000.Avocado is a manufacturer with a basis in its assets of $2.4 million (value of $3.1 million)and liabilities of $600,000.It is in the 35% tax bracket and uses a 10% discount factor when making investments.However,the Federal long-term tax-exempt rate is only 5%.Tomato is a distributor of a variety of products including those of Avocado's.Its basis in its assets is $2 million (value of $1.5 million)and has liabilities of $400,000.Avocado is willing to acquire only $1 million of Tomato's assets and all its liabilities for stock and $100,000 cash.Tomato will distribute its remaining assets,cash,and Avocado stock to its shareholders in exchange for their stock and then liquidate.

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The Answer of Present Value Tables needed for this question.Avocado Corporation wants to acquire Tomato Corporation because their businesses are complementary and Tomato has unused business credits of $63,000.Avocado is a manufacturer with a basis in its assets of $2.4 million (value of $3.1 million)and liabilities of $600,000.It is in the 35% tax bracket and uses a 10% discount factor when making investments.However,the Federal long-term tax-exempt rate is only 5%.Tomato is a distributor of a variety of products including those of Avocado's.Its basis in its assets is $2 million (value of $1.5 million)and has liabilities of $400,000.Avocado is willing to acquire only $1 million of Tomato's assets and all its liabilities for stock and $100,000 cash.Tomato will distribute its remaining assets,cash,and Avocado stock to its shareholders in exchange for their stock and then liquidate.

Present Value Tables Needed for This Question