# Assume a corporation has earnings before depreciation and taxes of \$102,000, depreciation of \$40,000, and that it has a 35 percent tax bracket.

Assume a corporation has earnings before depreciation and taxes of \$102,000, depreciation of \$40,000, 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 \$12,000 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 \$12,000?

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