In Year 2 a new product is forecast to generate Earnings before Depreciation and Taxes of...

In Year 2 a new product is forecast to generate Earnings before Depreciation and Taxes of $30,000. Depreciation Expense associated with the product is $8,000. The company’s tax rate is 30%. Compute the after-tax cash flow for Year 2 using both the Income Statement and Tax Shield methods and show you arrive at the same result.

Expert Solution

SEE THE IMAGE. ANY DOUBTS, FEEL FREE TO ASK. THUMBS UP PLEASE

jeff jeffy answered 6 days ago

Earnings before depreciation, interest, and taxes $1,600,000 Depreciation expense

Earnings before depreciation, interest, and taxes $1,600,000 Depreciation expense $100,000 Tax rate 40% Interest expense $10,000 Common dividends paid $200,000 Number of shares of common stock outstanding $500,000 a. 1.79 b. 1.39 c. 3.20 d. 1.20

Assume a firm has earnings before depreciation and taxes of $520,000 and no depreciation. It is...

Assume a firm has earnings before depreciation and taxes of $520,000 and no depreciation. It is in a 35 percent tax bracket. a. Compute its cash flow. b. Assume it has $520,000 in depreciation. Recompute its cash flow. c. How large a cash flow benefit did the depreciation provide?

Assume a corporation has earnings before depreciation and taxes of $90,000, depreciation of $35,000, and that...

Assume a corporation has earnings before depreciation and taxes of $90,000, depreciation of $35,000, and that it has a 40% combined tax bracket. What are the after-tax cash flows for the company? Multiple Choice $68,000 $62,800 $72,600 $71,800

Assume a corporation has earnings before depreciation and taxes of $104,000, depreciation of $42,000, and that...

Assume a corporation has earnings before depreciation and taxes of $104,000, depreciation of $42,000, and that it has a 30 percent tax bracket. a. Compute its cash flow using the following format. (Input all answers as positive values.) b. How much would cash flow be if there were only $16,000 in depreciation? All other factors are the same. c. How much cash flow is lost due to the reduced depreciation from $42,000 to $16,000? PLEASE HELP!!!

This year, FCF Inc. has earnings before interest and taxes of $9,420,000, depreciation expenses of $1,400,000,...

This year, FCF Inc. has earnings before interest and taxes of $9,420,000, depreciation expenses of $1,400,000, capital expenditures of $1,500,000, and has increased its net working capital by $475,000. If its tax rate is 38%, what is its free cash flow? Round to to 2 decimals

A firm has S600,000 earnings before depreciation, interest, taxes. The firm has a depreciation expense of...

A firm has S600,000 earnings before depreciation, interest, taxes. The firm has a depreciation expense of $100,000, and a tax rate of 35%? What is net cash flow from operations?

Hannaford Enterprises reported earnings before interest, taxes, depreciation and amortization (EBITDA) of $ 500 million in...

Hannaford Enterprises reported earnings before interest, taxes, depreciation and amortization (EBITDA) of $ 500 million in 2017. The firm had depreciation of $80 million and reported capital expenditures of $ 120 million. The book value of the invested capital was $2,000 million. The firm’s total working capital increased from $80 million to $180 million, but half of this increase was due to an increase in the cash balance; the firm has no short-term debt. The firm has a tax rate...

What are earnings before interest and taxes for 2000?

Use the following to answer questions 7-15: 1999 2000 Sales $2900 $3300 Cogs $2030 $2310 Interest $410 $420 Dividends $56 $79 Depreciation $290 $330 Cash $250 $150 Receiviables $242 $412 Current liabilities $900 $1100 Inventory $1015 $900 Long Term Debt $3200 $3100 Net Fixed Assets $6000 $5700 Tax Rate 34% 34% 7. What are earnings before interest and taxes for 2000? A) $112 B) $158 C) $580 D) $660 E) $780 ...

In year 1, AMC will earn $ before interest and taxes. The market expects these earnings...

In year 1, AMC will earn $ before interest and taxes. The market expects these earnings to grow at a rate of per year. The firm will make no net investments (i.e., capital expenditures will equal depreciation) or changes to net working capital. Assume that the corporate tax rate equals %. Right now, the firm has $ in risk-free debt. It plans to keep a constant ratio of debt to equity every year, so that on average the debt will...

SALES $25,000 COSTS OF GOODS $16,000 DEPRECIATION $3,000 EARNINGS BEFORE INTEREST AND TAXES $6,000 INTEREST PAID...

SALES $25,000 COSTS OF GOODS $16,000 DEPRECIATION $3,000 EARNINGS BEFORE INTEREST AND TAXES $6,000 INTEREST PAID $2,000 TAXABLE INCOME $4,000 TAXES (34%) $1,360 NET INCOME $2,640 (ADDITION TO) RETAINED EARNINGS $1,584 DIVIDENDS $1,056 CURRENT ASSET 2002 2003 CURRENT LIABILITIES 2002 2003 CASH $4,000 $3,000 ACCOUNTS PAYABLE $3,000 $2,500 ACCOUNTS RECEIVABLE $9,000 $11,000 NOTES PAYABLE $6,000 $6,416 INVESNTORY $5,000 $4,500 LONG TERM DEBT $15,000 $13,000 OWNERS EQUITY FIXED ASSETS COMMON STOCK $14,000 $16,500 NET FIXED ASSET(PLANT AND EQUIPMENT) $30,000 $31,500 RETAINED...

Question