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Assume a firm has earnings before depreciation and taxes of $640,000 and no depreciation. It is in a 35 percent tax bracket. 1. Compute its
Assume a firm has earnings before depreciation and taxes of $640,000 and no depreciation. It is in a 35 percent tax bracket.
1. Compute its cash flow
2. Assume it has $640,000 in depreciation. Recompute its cash flow.
3. How large a cash flow benefit did the depreciation provide?
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