Question
1. Assume a firm has earnings before depreciation and taxes of $660,000 and no depreciation. It is in a 30 percent tax bracket. a. Compute
1. Assume a firm has earnings before depreciation and taxes of $660,000 and no depreciation. It is in a 30 percent tax bracket.
a. Compute its cash flow.
Cash flow:
b. Assume it has $660,000 in depreciation. Recompute its cash flow.
Cash flow:
c. How large a cash flow benefit did the depreciation provide?
Benefit in cash flow:
2. Assume a $52,000 investment and the following cash flows for two alternatives.
| Year | Investment A | Investment B | ||||
| 1 | $ | 15,000 | $ | 25,000 | ||
| 2 | 15,000 | 15,000 | ||||
| 3 | 15,000 | 20,000 | ||||
| 4 | 10,000 | |||||
| 5 | 15,000 | |||||
|
| ||||||
a. Calculate the payback for investment A and B. (Round your answers to 2 decimal places.)
Investment A years:
Investment B years:
Step by Step Solution
There are 3 Steps involved in it
Step: 1
Get Instant Access to Expert-Tailored Solutions
See step-by-step solutions with expert insights and AI powered tools for academic success
Step: 2
Step: 3
Ace Your Homework with AI
Get the answers you need in no time with our AI-driven, step-by-step assistance
Get Started
The Essential Nonprofit Fundraising Handbook
Authors: Michael A. Sand, Linda Lysakowski
1st Edition
1601630727, 978-1601630728
