Problems Assume a corporation has earnings before depreciation and taxes of $90,000, and depreciation of $40,000, and that it has a 30 percent tax bracket Compute its cash flow using the format below Earnings before depreciation and taxes Earnings before taxes Earnings after taxes Depreciation Cash flow Solution: Earnings before depreciation and taxes $90000 Depreciation 40000 Earnings before taxes 50.000 Taxes(@ 30% 15000 Ear fter taxes $35,000 Depreciation 40.000 Cash flow $75000 S-423 oyrightC2005 by The McGraw-Hill Companies, IncCopyright © 2005 by The McGraw-Hill Companies, Inc. S-423 Problems 12-1. Assume a corporation has earnings before depreciation and taxes of $90,000, and depreciation of $40,000, and that it has a 30 percent tax bracket. 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 Solution: Earnings before depreciation and taxes $90,000 Depreciation –40,000 Earnings before taxes 50,000 Taxes @ 30% –15,000 Earnings after taxes $35,000 Depreciation +40,000 Cash flow $75,000