Do the problem as follows: 1) Calculate the net present value for the origi

Do the problem as follows:

1) Calculate the net present value for the original transaction.

2) Calculate the net present value for the alternative transaction by figuring the tax cost at the end of year 1 and the end of the year 2 assuming taxable
income of $50000 at the end of each of those years.

3) Discount the tax cost for each of those two years to the present.

4) Subtract the net present value of the tax costs from the $100000 of taxable income.

5) Compare the net present values for the original transaction and the alternative.