Essentials Of Investments
11th Edition
ISBN: 9781260013924
Author: Bodie, Zvi, Kane, Alex, MARCUS, Alan J.
Publisher: Mcgraw-hill Education,
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![Problem 12-2 (Algo) Cash flow [LO12-2]
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](https://content.bartleby.com/qna-images/question/70cd1d2f-e044-431b-bbed-147c5be3c27f/566e44be-48f1-4a67-a08e-35dbb9773c71/4ean3a4_processed.png)
Transcribed Image Text:Problem 12-2 (Algo) Cash flow [LO12-2]
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
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