Question

Assume a corporation has earnings before depreciation and taxes of $100,000, depreciation of $40,000, and that it has a 30 percent tax bracket. What are the after-tax cash flows for the company?

Answer 1

82,00

Answer 2

19,000

Answer 3

[AI-generated answer — Explain Bot]

To calculate the after-tax cash flows for the company, we need to consider the effects of taxes on the earnings before depreciation.

Step 1: Calculate the taxable income.
Taxable Income = Earnings before Depreciation - Depreciation
Taxable Income = $100,000 - $40,000
Taxable Income = $60,000

Step 2: Calculate the tax amount.
Tax Amount = Taxable Income * Tax Rate
Tax Amount = $60,000 * 0.30
Tax Amount = $18,000

Step 3: Calculate the after-tax cash flows.
After-tax Cash Flows = Earnings before Depreciation - Tax Amount
After-tax Cash Flows = $100,000 - $18,000
After-tax Cash Flows = $82,000

Therefore, the after-tax cash flows for the company would be $82,000.