Question

Fill in the missing numbers for the following income statement. (Input all amounts as positive values.)

Sales	$	675,900
Costs		430,800
Depreciation		103,400
EBIT	$
Taxes (30%)
Net income	$

Calculate the OCF.

OCF

$

What is the depreciation tax shield?

Depreciation tax shield

$

Answer 1

EBIT = sales - costs-depreciation = 675900 - 430800 - 103400 = $141,700

Net income = (1-tax rate ) EBIT = 0.7 * 141700 = $ 99,190

OCF = Net income - depreciation = 99,190 + 103400 = $202,590

Depreciation shield = tax rate * depreciation = 0.3 * 103400 = $ 31,020