Question: How do depreciation and other noncash charges act as cash
How do depreciation and other noncash charges act as cash inflows to the firm? Why does a depreciation allowance exist in the tax laws? For a profitable firm, is it better to depreciate an asset quickly or slowly for tax purposes? Explain.
Answer to relevant QuestionsWhat is operating cash flow (OCF)? What is free cash flow (FCF), and how is it related to OCF? Trish Foods, Inc. had pretax ordinary corporate income during 2009 of $2.7 million. In addition during the year, Trish sold a group of non-depreciable business assets (in the 5-year depreciation class) that it had purchased ...How can you find the number of time periods needed to repay: (a) A single-payment loan and (b) An installment loan requiring equal annual end-of-year payments? What is perpetuity, and how is its present value conveniently calculated? How do you find the present value of a growing perpetuity? Mary Sullivan, capital outlay manager for Waxy Widgets, has been instructed to establish a contingency fund to cover the expenses over the next two years (24 months) associated with repairing defective widgets from a new ...
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