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utterfly Tractors had $15.50 million in sales last year. Cost of goods sold was $8.30 million, depreciation expense was $2.30 million, interest payment on outstanding debt was $1.30 million, and the firm’s tax rate was 21%. What was the firm’s net income? Note: Enter your answer in millions rounded to 2 decimal places. What was the firm’s cash flow? Note: Enter your answer in millions rounded to 2 decimal places. What would happen to net income and cash flow if depreciation were increased by $1.30 million? Note: Enter your numeric answers in millions rounded to 2 decimal places. Select "unaffected" if the results do not affect the balance. Would you expect the change in depreciation to have a positive or negati

utterfly Tractors had $15.50 million in sales last year. Cost of goods sold was $8.30 million, depreciation expense was $2.30 million, interest payment on outstanding debt was $1.30 million, and the firm’s tax rate was 21%. What was the firm’s net income? Note: Enter your answer in millions rounded to 2 decimal places. What was the firm’s cash flow? Note: Enter your answer in millions rounded to 2 decimal places. What would happen to net income and cash flow if depreciation were increased by $1.30 million? Note: Enter your numeric answers in millions rounded to 2 decimal places. Select "unaffected" if the results do not affect the balance. Would you expect the change in depreciation to have a positive or negati

Essentials Of Investments
Essentials Of Investments
11th Edition
ISBN:9781260013924
Author:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.
Publisher:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.
Chapter1: Investments: Background And Issues
Section: Chapter Questions
Problem 1PS
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Butterfly Tractors had $15.50 million in sales last year. Cost of goods sold was $8.30 million, depreciation expense was $2.30 million, interest payment on outstanding debt was $1.30 million, and the firm’s tax rate was 21%.

  1. What was the firm’s net income?

    Note: Enter your answer in millions rounded to 2 decimal places.

  2. What was the firm’s cash flow?

    Note: Enter your answer in millions rounded to 2 decimal places.

     

  3. What would happen to net income and cash flow if depreciation were increased by $1.30 million?

    Note: Enter your numeric answers in millions rounded to 2 decimal places. Select "unaffected" if the results do not affect the balance.

  4. Would you expect the change in depreciation to have a positive or negative impact on the firm’s stock price?
  5. What would be the impact on net income if depreciation was $1 million and interest expense was $2 million?
  6. What would be the impact on cash flow if depreciation was $1.30 million and interest expense was $2.30 million?

    Note: Enter your numeric answer in millions rounded to 2 decimal places. Select "unaffected" if the results do not affect the balance.

 

a. Net income b. Net cash flow c. Net income would be c. Cash flow would be d. Impact on stock price e. Impact on net income f. Cash flow would be million million by by by million million million
Transcribed Image Text:a. Net income b. Net cash flow c. Net income would be c. Cash flow would be d. Impact on stock price e. Impact on net income f. Cash flow would be million million by by by million million million
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Answer for question 6 is still wrong.

What would be the impact on cash flow if depreciation was $1.30 million and interest expense was $2.30 million?

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Please answer Question 3 and Question 6.

What would happen to net income and cash flow if depreciation were increased by $1.30 million?

What would be the impact on cash flow if depreciation was $1.30 million and interest expense was $2.30 million?

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