Assume a corporation has earnings before depreciation and taxes of $110,000, depreciation of $48,000, and that it has a 30 percent tax bracket. a. Compute its cash flow using the following format. Earnings before depreciation and taxes Depreciation Earnings before taxes Taxes Earnings after taxes Depreciation Cash flow b. How much would cash flow be if there were only $16,000 in depreciation? All other factors are the same. Cash flow c. How much cash flow is lost due to the reduced depreciation from $48,000 to $16,000? Cash flow lost

Assume a corporation has earnings before depreciation and taxes of $110,000, depreciation of $48,000, and that it has a 30 percent tax bracket. a. Compute its cash flow using the following format. Earnings before depreciation and taxes Depreciation Earnings before taxes Taxes Earnings after taxes Depreciation Cash flow b. How much would cash flow be if there were only $16,000 in depreciation? All other factors are the same. Cash flow c. How much cash flow is lost due to the reduced depreciation from $48,000 to $16,000? Cash flow lost

Entrepreneurial Finance

6th Edition

ISBN:9781337635653

Author:Leach

Publisher:Leach

Chapter14: Security Structures And Determining Enterprise Values

Section: Chapter Questions

Problem 9EP

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