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

Question

Quizplus · Accepted Answer

First, we need to calculate the taxable income of the corporation by subtracting depreciation from earnings before taxes and depreciation:

$82,000 - $45,000 = $37,000

Next, we need to calculate the amount of taxes the corporation owes by multiplying the taxable income by the tax rate:

$37,000 x 0.30 = $11,100

Finally, we can calculate the after-tax cash flows by subtracting the taxes from the earnings before depreciation and taxes:

$82,000 - $11,100 = $70,900

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