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Assume a corporation has earnings before depreciation and taxes of $107,000, depreciation of $45,000, and that it has a 30 percent tax bracket. a. Compute its cash flow using the following format. (Input all answers as positive values.) Earnings before depreciation and taxes 107,000 Depreciation 45,000 Earnings before taxes $ 62,000 Taxes 18,600 Earnings after taxes 43,400 Depreciation 45,000 Cash flow 2$ 88,400

Assume a corporation has earnings before depreciation and taxes of $107,000, depreciation of $45,000, and that it has a 30 percent tax bracket. a. Compute its cash flow using the following format. (Input all answers as positive values.) Earnings before depreciation and taxes 107,000 Depreciation 45,000 Earnings before taxes $ 62,000 Taxes 18,600 Earnings after taxes 43,400 Depreciation 45,000 Cash flow 2$ 88,400

Essentials Of Investments
Essentials Of Investments
11th Edition
ISBN:9781260013924
Author:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.
Publisher:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.
Chapter1: Investments: Background And Issues
Section: Chapter Questions
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Assume a corporation has earnings before depreciation and taxes of $107,000, depreciation of $45,000, and that it has a 30 percent tax bracket. a. Compute its cash flow using the following format. (Input all answers as positive values.) Earnings before depreciation and taxes 107,000 Depreciation 45,000 Earnings before taxes 62,000 Taxes 18,600 Earnings after taxes 43,400 Depreciation 45,000 Cash flow 88,400 %24 %24 %24 %24
Transcribed Image Text:Assume a corporation has earnings before depreciation and taxes of $107,000, depreciation of $45,000, and that it has a 30 percent tax bracket. a. Compute its cash flow using the following format. (Input all answers as positive values.) Earnings before depreciation and taxes 107,000 Depreciation 45,000 Earnings before taxes 62,000 Taxes 18,600 Earnings after taxes 43,400 Depreciation 45,000 Cash flow 88,400 %24 %24 %24 %24
b. How much would cash flow be if there were only $16,000 in depreciation? All other factors are the same. Cash flow 0. c. How much cash flow is lost due to the reduced depreciation from $45,000 to $16,000? Cash flow lost 0. %24
Transcribed Image Text:b. How much would cash flow be if there were only $16,000 in depreciation? All other factors are the same. Cash flow 0. c. How much cash flow is lost due to the reduced depreciation from $45,000 to $16,000? Cash flow lost 0. %24
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