Problem 12-3 (P12-3) Cash flow

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ACCOUNTING

Problem 12-3 (Cash flow). Assume a firm has earnings before depreciation and taxes of $200,000 and no depreciation. It is in a 40 percent tax bracket.
Required:
(a) Compute its cash flow.
(b) Assume it has $200,000 in depreciation. Recompute its cash flow.
(c) How large a cash flow benefit did the depreciation provide?

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