Question
Grommit Engineering expects to have net income next year of $ 47.61million and free cash flow of $22.49 million. Grommit's marginal corporate tax rate is
Grommit Engineering expects to have net income next year of $ 47.61million and free cash flow of $22.49
million. Grommit's marginal corporate tax rate is 40%.
a.If Grommit increases leverage so that its interest expense rises by$15.7million, how will net income change?
b.For the same increase in interestexpense, how will free cash flowchange?
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Analysis for Financial Management
Authors: Robert Higgins
11th edition
77861787, 978-0077861780
