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Unformatted text preview: company's tax rate is 40%. To compute OCF using the tax shield method, what would be the value of the depreciation tax shield which would be shown as a cash inflow in the first year? That is, how many dollars of tax are saved as a result of the depreciation expense? 4. From the following information, compute total cash flow from assets in Year 4 (the terminal year). Assume the appropriate tax rate is 39%. Time Zero Year 1 Year 2 Year 3 Year 4 OCF 10,000 11,000 11,500 12,000 Change in NWC (5,000) (2,000) (2,000) (3,000) ? Capital Spending (after tax) (25,000) 8,000 What is the total cash flow from assets?...
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This note was uploaded on 03/15/2012 for the course BUS-F 301 taught by Professor T during the Spring '12 term at IUPUI.
- Spring '12