Assume a corporation has earnings before depreciation and taxes of $82,000,depreciation of $45,000,and that it has a 30 percent tax bracket.What are the after-tax cash flows for the company?

Question

Quizplus · Accepted Answer

To calculate the after-tax cash flows, we need to first calculate the earnings before taxes. This can be done by subtracting the depreciation from the earnings before depreciation and taxes:
$82,000 - $45,000 = $37,000
Next, we need to calculate the amount of taxes owed by applying the 30% tax bracket to the earnings before taxes:
$37,000 x 0.30 = $11,100
Finally, we can calculate the after-tax cash flows by subtracting the taxes owed from the earnings before depreciation and taxes:
$82,000 - $11,100 = $70,900. Therefore, the answer is A) $70,900.

Assume a Corporation Has Earnings Before Depreciation and Taxes of $82,000,depreciation