B 4 5 6 (1) If a company's expense item other than depreciation goes down by $200 and its tax rate is 35%, what would be the impact on net income and on cash? A EXPENSE OTHER THAN DEPRECIATION TAX RATE A NET INCOME A CASH (2) If depreciation expense increases by $500 and the tax rate is 25%, what would be the impact on net income and on cash? A DEPRECIATION EXPENSE TAX RATE A NET INCOME A CASH 7 8 (3) If a firm buys new equipment for $400 and sells some of its existing equipment for $600, what would be its NCS? 9 20 21 PURCHASES OF EQUIPMENT SALES OF EXISTING EQUIPMENT 22 23 NET CAPITAL SPENDING 24 (4) If gross fixed assets is $1,000 in year 1 and $1,300 in year, what would be NCS in year 2? 25 26 27 28 29 GFA YEAR 1 GFA YEAR 2 NET CAPITAL SPENDING YEAR 2 30 (5) If net fixed assets is $400 in year 1, $250 in year 2 and depreciation expense is $30 in year 2, what is NCS in year 2? 31 32 33 34 35 NFA YEAR 1 NFA YEAR 2 DEPRECIATION YEAR 2 NET CAPITAL SPENDING YEAR 2