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Score: 0 of 2 pts 9 of 20 (10 complete) HW Score: 40.95%, 16.38 of 40 pts P2-11 (similar to) Question Help See Table 2.5 B showing financial statement data and stock price data for Mydeco Corp. Suppose Mydeco had purchased additional equipment for $12.1 million at the end of 2016, and this equipment was depreciated by $4 million per year in 2017, 2018, and 2019. Given Mydeco's tax rate of 35%, what impact would this additional purchase have had on Mydeco's net income in years 2016-2019? (Assume the equipment is paid for out of cash and that Mydeco earns no interest on its cash balances.) Calculate the new net income below: (Round to one decimal place.) (millions) Year 2016 Net Income $ Additional Depreciation $ Tax Savings $ New Net Income $ (65.6) 2019 603.2 (292.7) 310.5 (124.7) (79.4) (39.9) 66.5 (37.8) 28.7 (10.0) 18.7 55.9 $0.33 2015 2019 2015-2019 Financial Statement Data and Stock Price Data for Mydeco Corp. (All data as of fiscal year end; in $ millions) Income Statement 2015 2016 2017 2018 Revenue 403.3 364.3 420.6 514.4 Cost of Goods Sold (184.2) (177.5) (209.7) (243.0) Gross Profit 219.1 186.8 210.9 271.4 Sales and Marketing (65.3) (84.0) (105.3) Administration (59.8) (58.1) (58.7) (66.8) Depreciation & Amortization (28.2) (28.3) (32.7) (38.3) EBIT 65.5 35.1 35.5 61.0 Interest Income (Expense) (32.0) (32.4) (33.7) (36.8) Pretax Income 33.5 2.7 1.8 24.2 Income Tax (11.7) (0.9) (0.6) (8.5) Net Income 21.8 1.8 1.2 15.7 Shares Outstanding (millions) 55.9 55.9 55.9 55.9 Earnings per Share $0.39 $0.03 $0.02 $0.28 Balance Sheet 2016 2017 2018 Assets Cash 47.7 65.0 73.5 67.3 Accounts Receivable 88.8 67.9 69.8 78.1 Inventory 33.1 32.1 27.6 32.7 Total Current Assets 169.6 165.0 170.9 178.1 Net Property, Plant & Equipment 244.9 242.2 310.2 346.7 Goodwill & Intangibles 358.2 358.2 358.2 358.2 Total Assets 772.7 765.4 839.3 883.0 Liabilities & Stockholders' Equity Accounts Payable 20.4 17.3 22.3 27.9 Accrued Compensation 7.5 7.3 6.7 8.1 Total Current Liabilities 27.9 24.6 29.0 36.0 Long-Term Debt 498.8 498.8 574.3 600.2 Total Liabilities 526.7 523.4 603.3 636.2 Stockholders' Equity 246.0 242.0 236.0 246.8 Total Liabilities & Stockholders' 772.7 765.4 839.3 883.0 Equity Statement of Cash Flows 2015 2016 2017 2018 Net Income 21.8 1.8 1.2 15.7 Depreciation & Amortization 28.2 28.3 32.7 38.3 Change in Accounts Receivable 3.9 20.9 -1.9 (8.3) Change in Inventory (2.9) 1.0 4.5 (5.1) Change in Pay. & Accrued Comp. 2.5 (3.3) 4.4 7.0 Cash from Operations 53.5 48.7 40.9 47.6 Capital Expenditures (23.5) (26.9) (103.4) (75.2) Cash from Investing Activ. (23.5) (26.9) (103.4) (75.2) Dividends Paid (4.5) (4.5) (4.5) (4.5) Sale (or Purchase) of Stock Debt Issuance (Pay Down) 75.5 25.9 Cash from Financing Activ. (4.5) (4.5) 71.0 21.4 Change in Cash 17.3 8.5 (6.2) Mydeco Stock Price $8.78 $3.68 $5.52 $8.72 78.7 84.1 36.3 199.1 351.6 358.2 908.9 33.1 10.2 43.3 600.2 643.5 265.4 908.9 2019 18.7 39.9 (6.0) (3.6) 7.3 56.3 (39.3) (39.3) (5.6) 25.5 (5.6) 11.4 $10.96
