Assume a corporation has earnings before depreciation and taxes of $112,000 depreciation of $50,000 and is in a 40 percent tax bracket.
(a) How much would cash flow be if there were only $12,000 in depreciation? All other factors are the same. (Omit the "$" sign in your response.)
Cash flow $
(b) How much cash flow is lost due to the reduced depreciation between $50,000 and $12,000? (Omit the "$" sign in your response.)
Cash flow $