The Rogers Corporation has a gross profit of $784,000 and $314,000 in depreciation expense. The Evans Corporation also has $784,000 in gross profit, with $48,900 in depreciation expense. Selling and administrative expense is $200,000 for each company.

a.Given that the tax rate is 40 percent, compute the cash flow for both companies.

b.Calculate the difference in cash flow between the two firms.