Homework Answers
a. Deprecation in 2014 = 0.0375 * 600000 = 22500
b. TI = Revenue - expenses - deprerciation
= 862000 - 434000 - 22500
= 405500
Tax = 113900 + 34% * (405500 - 335000)
= 113900 + 0.34 * 70500
= 137870
Net cash flow = TI - tax + Depreciation = 405500 - 137870 + 22500 = 290130
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