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Consider two firms, Airgain Corporation and Belden Company. Both corporations will either make $36,000 or...

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Finance

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 38%. 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 carrybacks?

$6,460

$6,430

$6,400

$6,370

$6,340

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