1answer.
Ask question
Login Signup
Ask question
All categories
  • English
  • Mathematics
  • Social Studies
  • Business
  • History
  • Health
  • Geography
  • Biology
  • Physics
  • Chemistry
  • Computers and Technology
  • Arts
  • World Languages
  • Spanish
  • French
  • German
  • Advanced Placement (AP)
  • SAT
  • Medicine
  • Law
  • Engineering
saveliy_v [14]
3 years ago
11

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:

a.

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.

b.

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.

c.

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

You might be interested in
A brand community refers to the:
Nina [5.8K]

Answer:

The correct answer to the following question will be Option D.

Explanation:

  • A community or culture under which customers meet & connect who shares a collection of social relationships based on use or involvement in such a commodity, termed as a Brand community.
  • It offers corporations the chance to communicate more often with their customers, particularly true with either the presence of social networking sites.

The other three choices are not related to this type of community. So that Option D is the right answer.

4 0
3 years ago
What will most likely cause a lender to deny credit?
8090 [49]

Answer:

A historic credit score of 300

Explanation:

A credit score is a numeric record that expresses the reliability of a borrower to repay loans. The credit score or credit rating is determined by, among other things, credit history, income level, and the individual's income to debt ratio.

Credit scores range between 300 and 850. 300 is the lowest and the poorest score. A score of 300 indicates that the borrower has a bad history of debt repayment. They are always late on repayments,  miss on installments, or have defaulted on loans. Lenders consider such persons as high-risk borrowers and are likely to deny them credit facilities.

7 0
2 years ago
Kimona Company hired you as a consultant to help estimate its cost of common equity. You have obtained the following data: D0 =
nlexa [21]

Answer:

-2.23%

Explanation:

The formula to compute the cost of common equity under the DCF method is shown below:

= Current year dividend ÷ price + Growth rate

In first case,

The current dividend would be

= $0.85 + $0.85 × 5%

= $0.85 + $0.0425

= $0.8925

The other things would remain the same

So, the cost of common equity would be

= $0.8925 ÷ $20 + 5%

= 0.044625 + 0.05

= 9.46%

In second case,

The price would be $40

The other things would remain the same

So, the cost of common equity would be

= $0.8925 ÷ $40 + 5%

= 0.0223125 + 0.05

= 7.23%

The difference would be

= 7.23% - 9.46%

= -2.23%

4 0
3 years ago
Productivity measurement is complicated by
CaHeK987 [17]
Productivity measurement is complicated by the fact the precise units of measure are often unavailable. When you are managing productivity it can vary based on each task or the person completing the tasks. Because of this, it makes it complicated for management to measure productivity as there could be no units or no comparable units to measure. Productivity is better reflected on the outcome of what they do complete versus what they do not. 
3 0
2 years ago
A German company wants to buy dollars to purchase U.S. bonds. In the open-economy macroeconomic model of the U.S., this transact
lilavasa [31]

Answer:

The correct answer is d. the supply of currency in the foreign exchange market, and the demand for loanable funds.

Explanation:

In an open economy, we must add the external sector, which includes the Trade Balance or net exports and the Capital or Financial Balance.

Net exports, being part of aggregate expenditure, are incorporated into the SI. However, the inflows and outflows of payment commitments or international financial assets are recorded in the capital account, which gives rise to a new curve, the BB.

We know that in an open economy, monetary phenomena depend on the exchange system that the country follows: fixed or flexible exchange rate.

Under a fixed exchange rate, the variable that is permanently and permanently adjusted to an imbalance in the money market is international reserves.

Under the flexible exchange rate, the adjustment variable is the exchange rate.

With a fixed exchange rate, an increase in the money supply pressures upward on the level of domestic prices, which encourages imports and discourages exports, causing us to lose competitiveness against our business partners. This translates into a permanent and definitive loss of international reserves, which thus constitute the adjustment variable, that is, the monetary phenomenon.

7 0
3 years ago
Other questions:
  • A client lists their primary investment objective as liquidity. An RR believes that investments in municipal securities are best
    14·1 answer
  • SDJ, Inc., has net working capital of $2,060, current liabilities of $5,550, and inventory of $1,250.
    11·1 answer
  • A rookie quarterback is negotiating his first NFL contract. His opportunity cost is 10%. He has been offered three possible 4-ye
    9·1 answer
  • What you have found in your review regarding accounting issues; What you believe the appropriate accounting treatment should be
    7·1 answer
  • After a recent divorce and many years as a stay-at-home mom, Cheryl is entering the workforce. As a single parent with three chi
    11·1 answer
  • Which of the following options is a challenge to the sustainability of strategically implementing an information​ system? A. Man
    11·1 answer
  • Gilbert would like to foster goal commitment in his department. He decides to do this by encouraging the collaboration of employ
    11·1 answer
  • Describe the events that occur in an efficient market in response to new information that causes the expected return to exceed t
    11·1 answer
  • The following information is for Hulk Gyms' first year of operations. Amounts are in millions of dollars. The enacted tax rate i
    5·1 answer
  • Barton Industries expects next year's annual dividend, D1, to be $2.00 and it expects dividends to grow at a constant rate g = 4
    8·1 answer
Add answer
Login
Not registered? Fast signup
Signup
Login Signup
Ask question!