Problem

The U.S. government has settled a dispute with your company for $16 million. It is com­mit...

The U.S. government has settled a dispute with your company for $16 million. It is com­mitted to pay this amount in exactly 12 months. However, your company will have to pay tax on the award at a marginal tax rate of 35%. What is the award worth? The one-year Treasury rate is 5.5%.

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