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1 Assume a corporation has earnings before depreciation and taxes of $122,000, depreciation of $40,000, and that it has a 30 percent tax bracket.
E: 1
Assume a corporation has earnings before depreciation and taxes of $122,000, depreciation of $40,000, and that it has a 30 percent tax bracket.
a.Compute its cash flow using the following format. (Input all answers as positive values.)
Earnings before depreciation and taxes$ 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 $40,000 to $16,000?
Cash flow lost$
