FOUND.OF FINANCIAL MANAGEMENT-ACCESS
17th Edition
ISBN: 9781260519969
Author: BLOCK
Publisher: MCG
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Textbook Question
Chapter 12, Problem 4P
Assume a firm has earnings before
a. If it is in a 35 percent tax bracket, compute its cash flow.
b. If it is in a 20 percent tax bracket, compute its cash flow.
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4. Assume a firm has earnings before depreciation and taxes of $400,000 and
depreciation of $100,000.
If the firm is in a 35 percent tax bracket, compute its cash flow.
b. If it is in a 20 percent tax bracket, compute its cash flow.
a.
3. Assume a firm has earnings before depreciation and taxes of $500,000 and no depreciation. It is in a 40 percent tax bracket. a. Compute its cash flow. b. Assume it has $500,000 in depreciation. Recompute its cash flow. C. How large a cash flow benefit did the depreciation provide?
3. Assume a firm has earnings before depreciation and taxes of $500,000 and no
depreciation. It is in a 40 percent tax bracket.
Compute its cash flow.
Assume it has $500,000 in depreciation. Recompute its cash flow.
a.
b.
с.
How large a cash flow benefit did the depreciation provide?
Chapter 12 Solutions
FOUND.OF FINANCIAL MANAGEMENT-ACCESS
Ch. 12 - Prob. 1DQCh. 12 - Why does capital budgeting rely on analysis of...Ch. 12 - Prob. 3DQCh. 12 - Prob. 4DQCh. 12 - What does the term mutually exclusive investments...Ch. 12 - Prob. 6DQCh. 12 - If a corporation has projects that will earn more...Ch. 12 - What is the net present value profile? What three...Ch. 12 - How does an asset’s ADR (asset depreciation...Ch. 12 - Assume a corporation has earnings before...
Ch. 12 - Assume a corporation has earnings before...Ch. 12 - Assume a firm has earnings before depreciation and...Ch. 12 - Assume a firm has earnings before depreciation and...Ch. 12 - Al Quick, the president of a New York Stock...Ch. 12 - Prob. 6PCh. 12 - Prob. 7PCh. 12 - Assume a 90,000 investment and the following cash...Ch. 12 - Prob. 9PCh. 12 - X-treme Vitamin Company is considering two...Ch. 12 - You buy a new piece of equipment for 16,230, and...Ch. 12 - Prob. 12PCh. 12 - Home Security Systems is analyzing the purchase of...Ch. 12 - Aerospace Dynamics will invest 110,000 in a...Ch. 12 - The Horizon Company will invest 60,000 in a...Ch. 12 - Skyline Corp. will invest 130,000 in a project...Ch. 12 - The Hudson Corporation makes an investment of ...Ch. 12 - The Pan American Bottling Co. is considering the...Ch. 12 - You are asked to evaluate the following two...Ch. 12 - Turner Video will invest 76,344 in a project. The...Ch. 12 - The Suboptimal Glass Company uses a process of...Ch. 12 - Keller Construction is considering two new...Ch. 12 - Davis Chili Company is considering an investment...Ch. 12 - Telstar Communications is going to purchase an...Ch. 12 - Assume 65,000 is going to be invested in each of...Ch. 12 - The Summit Petroleum Corporation will purchase an...Ch. 12 - Oregon Forest Products will acquire new equipment...Ch. 12 - Universal Electronics is considering the purchase...Ch. 12 - Prob. 30PCh. 12 - Prob. 31PCh. 12 - Prob. 32PCh. 12 - Hercules Exercise Equipment Co. purchased a...Ch. 12 - Prob. 2WECh. 12 - Returning to TXN’s summary page, record the...
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- Suppose a firm has the following information: Sales = $10million; costs of goods sold (excluding depreciation) = $5 million;depreciation = $1.4 million; other operating expenses = $2 million;interest expense = $1 million. If the tax rate is 25%, what is NOPAT,the net operating profit after taxes? ($1.2 million)arrow_forwardA firm has recorded EBIT at $1,800, depreciation at $600, EBT at $1,700 and a tax rate of 40%. Find the operating cash flows for this firm. Hin #1t: Operating CF = EBIT + depreciation - tax. Hint #2: Tax = EBT * tax rate.arrow_forwardAssume a firm has EBAT of $590,000, and no amortization. It is in a 40 percent tax bracket. a. Compute its cash flow. $ 354,000 b. Assume it has $590,000 in amortization. Recompute its cash flow. $ 590,000 c. How large a cash flow benefit did the amortization provide? $T] Cash flow Cash flow Benefit in cash flowarrow_forward
- Calculate a firm's free cash flow if it has net operating profit after taxes of $60,000, depreciation expense of $10,000, net fixed asset investment requirement of $40,000, a net current asset requirement of $30,000 and a tax rate of 30%arrow_forwardCalculate a firm's free cash flow if it has net operating profit after taxes of P60,000, depreciation expense of P7,000, an interest expense of P1,000, a net fixed asset investment of P30,000, a net current asset requirement of P15,000 and a tax rate of 30%.arrow_forward.....is the after tax cash flow generated by a business minus the cost of the capital it has deployed to generate that cash flow a. Net Present Value (NPV) a. Ob Economic value added (EVA) Oc. Internal Rate of Return (IRR) d. Discounted Cash Flowarrow_forward
- 1arrow_forwardPlease answer the questionarrow_forwardConsider a company with earnings before interest and taxes (EBIT) of $450,000, tax rate of 16%, depreciation and amortization expenses of $60,000, capital expenditures of $80,000, acquisition expenses of $30,000 and change in working capital of $40,000. How much is its free cash flow during that period? Round to the nearest cent.arrow_forward
- What is the operating cash flow for a firm with $500,000 profit before tax, $100,000 depreciation expense, and a 21% tax rate? Select one: a.$260,000 b.$325,000 c.$360,000 d.$495,000arrow_forwardProvide Such Answerarrow_forwardA firm's net income is $36 million, depreciation is $3 million, its investments in fixed capital totals $13 million, its AFTER-TAX interest totals $4 million and its investment in working capital totals $5 million. The tax rate is 40%. What is its Free Cash Flow to the Firm? a.$27.00 million b. $25.00 million c. $23.40 million d. $25.40 million Give typing answer with explanation and conclusionarrow_forward
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