Fine the annual report for some publicly listed high tech company that has losses. Refer to the tax footnote in the report to extract the NOL carryforward. Assume an after-tax discount rate of 10%
Calculate the firm’s marginal explicit tax rate using the Manzon (1994) market-value approach. Discuss and explain your result.
Under the Manzon (1994) approach, first calculate expected annual taxable income: TI-MVE*r, where MVE is the market value of equity of the firm and r is the after-tax discount rate.
Next calculate s-NOL/TI
Then calculate mtr =str(subtext s)/(l+r) to the s power
Use the collaboration forum for help with this formula.
Discuss and explain