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Coolidge Cola is forecasting the following income statement: Sales Operating costs excluding depreciation and amortization EBITDA Depreciation and amortization Operating income (EBIT) Interest expense Taxable
Coolidge Cola is forecasting the following income statement: Sales Operating costs excluding depreciation and amortization EBITDA Depreciation and amortization Operating income (EBIT) Interest expense Taxable income (EBT) Taxes (40%) Net income 30,000,000 20,000,000 10,000,000 5,000,000 5,000,000 2,000,000 3,000,000 1,200,000 1,800,000 Assume that, with the exception of depreciation, all other non-cash revenues and expenses sum to zero. Congress is considering a proposal that will allow companies to depreciate their equipment at a faster rate. If this provision were put in place, Coolidge's depreciation expense would be $8,000,000 (instead of $5,000,000). This proposal would have no effect on the economic value of the company's equipment, nor would it affect the company's tax rate, which would remain at 40 percent. If this proposal were to be implemented, what would be the company's net cash flow
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