Question details

Assume a firm has earnings before depreciation and taxes of $200,000 and no depreciation.
$ 5.00

Assume a firm has earnings before depreciation and taxes of $200,000 and no depreciation. It is in a 40 percent tax bracket.

a.         Compute its cash flow.

b.         Assume it has $200,000 in depreciation. Recompute its cash flow.

c.         How large a cash flow benefit did the depreciation provide?

Available solutions