The Rogers Corporation has a gross profit of $704,000 and $333,000 in depreciation expense. The Evans Corporation also has $704,000 in gross profit, with $49,300 in depreciation expense. Selling and administrative expense is $191,000 for each company.
a. Given that the tax rate is 40 percent, compute the cash flow for both companies.
Cash Flow Rogers=
Cash Flow Evans=
b. Calculate the difference in cash flow between the two firms.