Question

Assume a corporation has earnings before depreciation and taxes of $150,000, depreciation of $55,000, and a 40% tax bracket. a. compute its cash flow using this format: Earnings before Dep & Taxes Depreciation Earnings before Taxes Taxes Earnings after Taxes Depreciation b. Compute cash flow if depreciation is only $30,000 c. How much cash flow is lost due to the reduction of depreciation?

Answer #1

Assume a corporation has earnings before depreciation and taxes
of $126,000, depreciation of $42,000, and that it has a 35 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....

Assume a corporation has earnings before depreciation and taxes
of $125,000, depreciation of $40,000, and that it has a 30 percent
tax bracket.
a. Compute its cash flow using the following format. (Input all
answers as positive values.)
25,487 answers
PArticulars
Amount($)
earnings before depreciation
and taxes
Less:depreciation
Earnings before tax
Less:tax@30%
Net income
b. How much would cash flow be if there were only $15,000 in
depreciation? All other factors are the same. c. How much cash flow
is...

Assume a firm has earnings before depreciation and taxes of
$550,000 and no depreciation. It is in a 40 percent tax
bracket.
a. Compute its cash flow.
b. Assume it has $550,000 in depreciation.
Recompute its cash flow.
c. How large a cash flow benefit did the
depreciation provide?

1/ Assume a corporation has earnings before depreciation and
taxes of $105,000, depreciation of $45,000, and that it has a 35
percent tax bracket. What are the after-tax cash flows for the
company?
$87,800
$88,600
$78,800
$84,000
2/ The Wet Corp. has an investment project that will reduce
expenses by $20,000 per year for 3 years. The project's cost is
$30,000. If the asset is part of the 3-year MACRS category (33.33%
first year depreciation) and the company's tax rate...

Assume a project has earnings before depreciation and taxes of
$15,000, depreciation of $25,000, and that the firm has a 25% tax
bracket. What are the after-tax cash flows for the project?
Seleccione una: a. $15,000 b. $17,500 c. $28,000 d. $17,000 e.
($21,000) f. $19,000 g. $18,000 h. Can't be determined

Assume a corporation has earnings before amortization and taxes
(EBAT) of $100,000 and amortization of $10,000, and it has a 34
percent tax rate.
a. Compute its cash flow.
Cash flow $
b. Compute the difference in cash flow, If there was $50,000 in
amortization.
Difference in cash flow $

Assume a corporation has earnings before amortization and taxes
(EBAT) of $100,000 and amortization of $10,000, and it has a 34
percent tax rate.
a. Compute its cash flow. Cash flow $
b. Compute the difference in cash flow, If there was $50,000 in
amortization. Difference in cash flow $

Why are taxes deducted from the sum of EBIT (earnings before
interest and taxes) and depreciation when calculating operating
cash flow?
A.
Because taxes are cash inflow.
B.
Because taxes should not be paid.
C.
Because higher taxes lead to higher operating cash flow.
D.
Because taxes are paid in cash to the Internal Revenue
Service.

Consider a C corporation. The corporation earns $2 per share
before taxes. After the corporation has paid its corresponding
taxes, it will distribute 50% of its earnings to its shareholders
as a dividend. The corporate tax rate is 35%, the tax rate on
dividend income is 20%, and the personal income tax rate is set at
28%. How much is the total effective tax rate on the corporation
earnings? Note: Express your answers in strictly numerical terms.
For example, if...

Billco Corporation expects earnings before interest and taxes to
be $450,000 for the current tax year. Using the U.S. corporate flat
tax rate of 21%, compute the Billco’s earnings available for common
stockholders if the firm pays $25,000 in interest versus $25,000 in
preferred stock dividends.

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