Question
Grommit Engineering expects to have net income next year of $20.75 million and free cash flow of $22.15 million. Grommits marginal corporate tax rate is
Grommit Engineering expects to have net income next year of $20.75 million and free cash flow
of $22.15 million. Grommits marginal corporate tax rate is 35%.
a. If Grommit increases leverage so that its interest expense rises by $1 million, how will its net
income change?
b. For the same increase in interest expense, how will free cash flow change?
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Technical Analysis The Complete Resource For Financial Market Technicians
Authors: Charles Kirkpatrick, Julie Dahlquist
3rd Edition
0134137043, 978-0134137049
