Menendez Corporation expects to sell $ 12 million. Costs, excluding depreciation tion, will represent 75% of sales and a depreciation of $ 1.5 million is expected. Sales will be collected in cash and all costs less depreciation will be be settled during the year. The federal and state tax rate is 40%. to. Prepare an income statement. What will the company's expected net cash flow be? b. Suppose that Congress modified the tax laws and that doubled the company pricing. There were no changes in operations. How would it affect That in recorded earnings and net cash flow? c. Now suppose that Congress did not double depreciation but reduced it by fifty%. How will that affect net cash flow? d. If it were your company, would you prefer Congress to double depreciation spending tion or cut it in half? Explain your answer.
Menendez Corporation expects to sell $ 12 million. Costs, excluding
tion, will represent 75% of sales and a depreciation of $ 1.5 million is expected.
Sales will be collected in cash and all costs less depreciation will be
be settled during the year. The federal and state tax rate is 40%.
to. Prepare an income statement. What will the company's expected net cash flow be?
b. Suppose that Congress modified the tax laws and that doubled the
company pricing. There were no changes in operations. How would it affect
That in recorded earnings and net cash flow?
c. Now suppose that Congress did not double depreciation but reduced it by
fifty%. How will that affect net cash flow?
d. If it were your company, would you prefer Congress to double depreciation spending
tion or cut it in half? Explain your answer.
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