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

Question:

Assume a firm has earnings before depreciation and taxes of $200,000 and no depreciation. It is in a 25 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?

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