Cash flow (LO12-2) Assume a corporation has earnings before depreciation and taxes of $100,000, depreciation of $40,000, and that it has a 24 percent tax bracket.

a. Compute its cash flow using the following format:

Earnings before depreciation and taxes _____

Depreciation _____

Earnings before taxes _____

Taxes @ 24% _____

Earnings after taxes _____

Depreciation _____

b. Compute the cash flow for the company if depreciation is only $20,000.

c How much cash flow is lost due to the reduced depreciation from $40,000 to $20,000?