Bundle: Essentials of Business Communication, Loose-leaf Version, 11th + MindTap Business Communication, 1 term (6 months) Printed Access Card
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Chapter 5, Problem 5.4AAC
Summary Introduction

To prepare:

A memorandum to the employees.

Introduction:

Memo refers to a type of letter that is hand written in most of the cases for the purpose of internal communication within an organization. It is opposed to a typical letter that is used for external communication.

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Assume a firm has earnings before depreciation and taxes of $200,000 and no depreciation. It is in a 25 percent tax bracket. a. Compute its cash flow using the following format: Earnings before depreciation and taxes _____Depreciation _____Earnings before taxes _____Taxes @ 25% _____Earnings after taxes _____Depreciation _____Cash Flow _____ b. Compute the cash flow for the company if depreciation is $200,000. Earnings before depreciation and taxes _____Depreciation _____Earnings before taxes _____Taxes @ 25% _____Earnings after taxes _____Depreciation _____Cash Flow _____ c. How large a cash flow benefit did the depreciation provide?
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