Assume a firm has EBAT of $590,000, and no amortization. It is in a 40 percent tax bracket.a. Compute its cash flow.$ 354,000b. Assume it has $590,000 in amortization. Recompute its cash flow.$ 590,000c. How large a cash flow benefit did the amortization provide?$T]Cash flowCash flowBenefit in cash flow

Cash flow= (EBAT -Depriciation/ Amortization) * (1-tax rate) + Depriciation/ Amortization

Answered: Assume a firm has EBAT of $590,000, and…

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

Problem 1PS

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