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    Fair Weather Friend Corporation

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    Fair Weather Friend Corporation has earnings before depreciation and taxes of $90,000; and depreciation of $40,000 and that it has a 30 percent tax bracket.

    a. Compute its cash flow using the format below.

    Earnings before depreciation and taxes
    Depreciation
    Earnings before taxes
    Taxes @ 30%
    Earnings after taxes
    Depreciation
    Cash flow

    b. How much would cash flow be if there were only $10,000 in depreciation? All other factors are the same.
    c. How much cash flow is lost due to the reduced depreciation between a & b?

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    https://brainmass.com/business/discounted-cash-flows-model/101060

    Solution Preview

    Fair Weather Friend Corporation has earnings before depreciation and taxes of $90,000; and depreciation of $40,000 and that it has a 30 percent tax bracket.

    a. Compute its cash flow using the format below.

    First, you need to put in the number given ...

    Solution Summary

    This solution is comprised of a detailed explanation to compute its cash flow, and answer how much would cash flow be if there were only $10,000 in depreciation and how much cash flow is lost due to the reduced depreciation between a & b.

    $2.19

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