Assume a firm has EBAT of $200,000, and no amortization. It is in a 25 percent tax

Question:

Assume a firm has EBAT of $200,000, and no amortization. It is in a 25 percent tax bracket.
a. Compute its cash flow.
b. Assume it has $200,000 in amortization. Recompute its cash flow.
c. How large a cash flow benefit did the amortization provide.

Fantastic news! We've Found the answer you've been seeking!

Step by Step Answer:

Related Book For book-img-for-question

Foundations of Financial Management

ISBN: 978-1259024979

10th Canadian edition

Authors: Stanley Block, Geoffrey Hirt, Bartley Danielsen, Doug Short, Michael Perretta

See More Books

Question Posted: Sep 15, 2018 11:43 AM

See More Questions

Assume a firm has earnings before depreciation and taxes of $200,000 and no depreciation. It is in a 40 percent tax bracket. a. Compute its cash flow. b. Assume it has $200,000 in depreciation....
Assume a firm has earnings before depreciation and taxes of $440,000 and depreciation of $140,000. a. If it is in a 35 percent tax bracket, compute its cash flow. b. If it is in a 20 percent tax...
1) Owners Equity consists of all the following except: a. Additional paid in capital. b. Par value stock c. Debentures outstanding d. Retained earnings 2) On the statement of cash flows an increase...
Find all conjugates in C of the given number over the given field. 1+2 over Q
Economic historians Roger Ransom and Richard Sutch have estimated that African-American farmers in the U.S. South worked about 30 percent fewer hours per year after the Civil War than they had as...
The xz plane contains an infinite sheet of current in the positive z direction. The current per unit length (along the x direction) is ?. Figure(a) shows a point P above the sheet (y > 0) and two...
How is blockchain technology being used to reduce poverty and help clean up our oceans?
On January 1, 2013, Plano Company acquired 8 percent (16,000 shares) of the outstanding voting shares of the Sumter Company for $192,000, an amount equal to Sumters underlying book and fair value....
You also sell into the market for flints, which is perfectly competitive.The marginal cost of flints is also $1. Some Flint consumers also value chert, but some do not. The demand curve for flint by...
On July 1, 2020 Trolley & Train World borrowed money from First Friendly National Bank by issuing a $25,000, 90 day, non-interest bearing note. The note was discounted to 14%. Required: Compute...
Blink 281 Corporation is considering an investment that will cost $120,000 and last for five years. The investment will be amortized on a straight-line basis over that period. Earnings generated by...
As the three division managers of Galaxy Systems Inc. entered the central headquarters meeting room, each felt under pressure. They were there to meet with Marlene Davidson, the senior vice-president...
A satellite in circular orbit about the Moon fires a small probe in a direction opposite to the velocity of the satellite. If the speed of the probe relative to the satellite is the same as the...
On a national mathematics assessment test, a random sample of 120 twelfth grade students has a mean score of 150 with a standard deviation of 34. (a)Construct a 90% confidence interval for the...
A certain forest covers an area of 3200km^(2). Suppose that each year this area decreases by 6%. What will the area be after 15 years? Use the calculator provided and round your answer to the nearest...
Given the function f(x)=x^(3), write a function g(x) that is: f(x) reflected across the y-axis and then stretched vertically by 8 .
Miguel's bank is offering savings accounts with 4% interest compounded continuously. If Miguel invests $500, how much will he have in the account after 2 years?
A species of bacteria has a population of 473 . It doubles every 14 hours. Determine the population of the bacteria after 10 hours. Round to the nearest whole number.
Find the modulo class to which the number belongs for the indicated modulo system. 68, mod 8
Experiment: Tossing four coins Event: Getting three heads Identify the sample space of the probability experiment and determine the number of outcomes in the event. Draw a tree diagram when...
Dr. Phil wishes to know how many shares are necessary to elect 6 directors out of 14 directors up for election for the board of the Winfrey Publishing Company. There are 340,000 shares outstanding....
The Beasley Corporation has been experiencing declining earnings, but has just announced a 50 percent salary increase for its top executives. A dissident group of stockholders wants to oust the...
The Beasley Corporation has been experiencing declining earnings, but has just announced a 50 percent salary increase for its top executives. A dissident group of stockholders wants to oust the...
Recently, a famous movie star won a defamation trial against his ex-wife, also a famous movie star. The ex-husband claimed that his ex-wife had defamed him in a Washington Post column, where she...
On 1 August 2022, Jack, with the written approval of Mega Phones Board, then approaches Jill from Techworld to supply 500 Apple iPhones Mark XYZ, which have recently been released, for a total price...
Calculate Ending Inventory using Weighted average (WA) method Syd Gee Ltd Opening Trial Balance 1 June 2021 BANK STATEMENT As at 30 June 2021 DATE PARTICULARS DEBIT CREDIT BALANCE Account Debit...

Assume a firm has EBAT of $200,000, and no amortization. It is in a 25 percent tax

Question:

Step by Step Answer:

a Earnings before amortization and taxes cash flow 200000 Taxes cas...View the full answer

Foundations of Financial Management

Students also viewed these Business questions