All categories

3 years ago

Assume a firm has earnings before depreciation and taxes of $620,000 and no depreciation. It is in a 40 percent tax bracket.

Business

1 answer:

kvasek [131]3 years ago

7 0

Answer:

a. Its cash flow is $372,000

b. Its cash flow is $620,000.

c. The cash flow benefit the depreciation provides is $248,000

Explanation:

We have Earnings before taxes = $620,000 ( because there is no depreciation);

Tax expenses = 620,000 x 40% = $248,000;

=> Cash flow = Earnings before taxes - Tax expenses = 620,000 - 248,000 = $372,000.

We have Earnings before taxes = EBIT - Depreciation = $620,000 - $620,000 = 0;

=> Tax expenses = 0; Earning after tax = 0;

=> Cash flow = Earning after tax + depreciation = 0 + 620,000 = $620,000.

The cash flow benefit from depreciation = Depreciation expenses x tax rate = 620,000 x 40% = $248,000.

You might be interested in

Sue purchased a stock for 45 a share, held it for one year received a 2.34 divided and sold the stock for 46.45. what nominal ra

Alexxandr [17]

Answer:

8.4

Explanation:

nominal return - price return + dividend yield

price return = 46.45 /45 - 1 = 3.2%

dividend yield = 2.34 / 45 = 5.2%

7 0

3 years ago

A buyer and a seller are disputing a contract for sale and purchase. They agree to submit the matter to a third party who will m

leonid [27]

Answer:

Arbitration

Explanation:

Based on the information provided within the question it can be said that this type of settlement is called Arbitration. This term refers to a form of resolving disputes outside of the court system by bringing in a third party who will render an "arbitration award" that will make a binding determination on the dispute. Which is completely enforceable in the courts.

3 0

3 years ago

SCC Co. reported the following for the current year:

Juli2301 [7.4K]

Answer:

a. The inventory turnover is 8.00 times

b. The days’ sales in inventory is 68 days

Explanation:

a. In order to calculate the inventory turnover we would have to use the following formula:

inventory turnover=cost of goods sold/average inventory

inventory turnover=$ 48,800/($3,100+$ 9,100)/2

inventory turnover=8.00 times

b. In order to calculate thedays’ sales in inventory we would have to use the following formula:

days’ sales in inventory=(Ending invenory/cost of goods sold)*365

days’ sales in inventory=($9,100/$48,800)*365

days’ sales in inventory=68 days

5 0

3 years ago

When completing a worksheet, the

Radda [10]

please elaborate i dont understande what your asking.

4 0

3 years ago

You are a consulting firm intern and your job is to help a client choose investment projects. Your client, RealEstate, is a youn

steposvetlana [31]

Answer:

(f)None

Explanation:

Pay back period is the no of years in which cost of investment is recovered in the form of cash flow.

Project with cash back period of two years is acceptable .

Project 1

initial outlay of fund = 100 million dollar

cash flow in first two years = 50+50 = 100 million dollar