Assume a project has earnings before depreciation and taxes of $15,000, deprecia

Question

Assume a project has earnings before depreciation and taxes of $15,000, depreciation of $25,000, and that the firm has a 30 percent tax bracket. What are the after-tax cash flows for the project? Answer A. $18,000 B. $19,000 C. A loss of $21,000 D. None of these Assume a project has earnings before depreciation and taxes of $15,000, depreciation of $25,000, and that the firm has a 30 percent tax bracket. What are the after-tax cash flows for the project? $18,000 $19,000 A loss of $21,000 None of these A. $18,000 B. $19,000 C. A loss of $21,000 D. None of these

Explanation / Answer

Hi,

Please find the answer as follows:

After Tax Cash Flow = 15000 - .30*(15000 - 25000) = 18000.

Thanks.

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