E: 1

Assume a corporation has earnings before depreciation and taxes of $122,000, depreciation of $40,000, and that it has a 30 percent tax bracket.

a.Compute its cash flow using the following format.(Input all answers as positive values.)

Earnings before depreciation and taxes$DepreciationEarnings before taxes$TaxesEarnings after taxes$DepreciationCash flow$

b.How much would cash flow be if there were only $16,000 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 $16,000?

Cash flow lost$