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Question: Assume a firm has earnings before depreciation and taxes of $500,000 and no depreciation. It is in a 40 percent tax bracket.

a. Compute its cash flow.

b. Assume it has $500,000 in depreciation. Recompute its cash flow.

c. How large a cash flow benefit did the depreciation provide?

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Category:- Basic Finance
Reference No.:- M92597088

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