Consider two firms, Airgain Corporation and Belden Company. Both corporations will either make $36,000 or lose $17,000
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Consider two firms, Airgain Corporation and Belden Company. Both corporations will either make $36,000 or lose $17,000 every year with equal probability. The firms' profits are perfectly negatively correlated. The corporate tax rate is 19%. What is the difference between the total expected after-tax profit if the two firms merge and their total expected after-tax profits when they are two separate firms, assuming no tax-loss carryforwards or carryback?
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