Question
ABC purchased a $20,000,000 machine. The machine will be depreciated by $4,000,000 per year over 5 years, starting this year. Suppose ABC is paying 30%
ABC purchased a $20,000,000 machine. The machine will be depreciated by $4,000,000 per year over 5 years, starting this year. Suppose ABC is paying 30% tax rate. Assuming no other changes, which of the following will be CORRECT?
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ABCs earnings for the year will be lower by $20 million, and its cash flow for the year will be higher by $4 million.
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ABCs earnings for the year will be lower by $4 million and its cash flow for the year will be higher by $4 million.
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ABCs earnings for the year will be lower by $2.8 million, and its cash flow for the year will be higher by $2.8 million.
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ABCs earnings for the year will be lower by $2.8 million, and its cash flow for the year will be higher by $1.2 million.
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ABCs earnings for the year will be lower by $2.8 million, and its cash flow for the year will be lower by $1.2 million.
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Authors: Greg Middleton
1st Edition
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