# Fair Weather Friend Corporation

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?

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.