1. The earnings before interest and taxes are 53,000 for a firm, and the depreciation is 37,000. If the tax rate is 26%, what is the operating cash flow for this company? (Answer to the nearest whole number, i.e. 12,345).
2. Consider 2 potential assets: asset 1 pays 10, 20 and 30 in each of the next 3 years respectively and asset 2 pays 30, 20 and 10 in each of the next 3 years respectively. Calculate the present value of these assets at the discount rate of 3%. recalculate the present value at a discount rate of 12%. The present value of asset 2 should be higher in both cases but the spread (% difference) will be larger at 12% than it is at 3%. Why?