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Last year, a company reported $19m of sales, $6m of operating costs other than depreciation, and $1.1m of depreciation. The company had $9m of bonds
Last year, a company reported $19m of sales, $6m of operating costs other than depreciation, and $1.1m of depreciation. The company had $9m of bonds outstanding that carry a 6.0% interest rate, and its federal-plus-state income tax rate was 25%. This year's data are expected to remain unchanged except for one item, depreciation, which is expected to decrease by $200,000. By how much will the depreciation change cause the firm's net after-tax income and its net cash flow to change? Note that the company uses the same depreciation calculations for tax and stockholder reporting purposes. You are required to create a full income statement for the last year and the current year to display the changes. (6pts)
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