Assume a firm has earnings before depreciation and taxes of $610,000 and no depreciation. It is in a 30 percent tax bracket a. Compute its cash flow. Cash flow b. Assume it has $610,000 in depreciation. Recompute its cash flow. Cash flow c. How large a cash flow benefit did the depreciation provide? Benefit in cash flow
Assume a firm has earnings before depreciation and taxes of $610,000 and no depreciation. It is in a 30 percent tax bracket a. Compute its cash flow. Cash flow b. Assume it has $610,000 in depreciation. Recompute its cash flow. Cash flow c. How large a cash flow benefit did the depreciation provide? Benefit in cash flow
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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![Problem 12-3 (Algo) Cash flow [LO12-2]
Assume a firm has earnings before depreciation and taxes of $610,000 and no depreciation. It is in a 30 percent tax bracket.
a. Compute its cash flow.
Cash flow
b. Assume it has $610,000 in depreciation. Recompute its cash flow.
Cash flow
c. How large a cash flow benefit did the depreciation provide?
Benefit in cash flow](/v2/_next/image?url=https%3A%2F%2Fcontent.bartleby.com%2Fqna-images%2Fquestion%2F70cd1d2f-e044-431b-bbed-147c5be3c27f%2Fa70ff116-d88f-4666-8114-a01ef01b4674%2Fna802z3_processed.png&w=3840&q=75)
Transcribed Image Text:Problem 12-3 (Algo) Cash flow [LO12-2]
Assume a firm has earnings before depreciation and taxes of $610,000 and no depreciation. It is in a 30 percent tax bracket.
a. Compute its cash flow.
Cash flow
b. Assume it has $610,000 in depreciation. Recompute its cash flow.
Cash flow
c. How large a cash flow benefit did the depreciation provide?
Benefit in cash flow
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