See Table 2.5 5 showing financial statement data and stock price data for Mydeco Corp. Suppose Mydeco had purchased additional equipment for $11.8 million at the end of 2016, and this equipment was depreciated by $3.9 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 eams no interest on its cash balances.) Calculate the new net income below: (Round to one decimal place.) (millions) Year 2016 2017 2018 2019 Net Income Additional Depreciation $ Tax Savings New Net Income $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ 9 011 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 406.5 364.5 420.1 509.5 Cost of Goods Sold (188.0) (177.0) (2072) (244.6) Gross Profit 218.5 187.5 212.9 264.9 Sales and Marketing (65.9) (65.3) (83.2) (101.9) Administration (60.7) (59.6) (58.8) (65.2) Depreciation & Amortization (28.7) (26.9) (32.9) (39.6) EBIT 63.2 35.7 38.0 58.2 Interest Income (Expense) (35.1) (32.8) (33.6) (37.9) Pretax Income 28.1 2.9 4.4 20.3 Income Tax (9.8) (1.0) (1.5) (7.1) Net Income 18.3 1.9 2.9 13.2 Shares Outstanding (millions) 56.6 56.6 56.6 56.6 Earnings por Share $0.32 $0.03 $0.05 $0.23 Balance Sheet 2015 2016 2017 2018 Assets Cash 48.1 67.4 79.1 76.4 Accounts Receivable 90.1 70.1 70.6 75.7 Inventory 33.3 31.4 26.9 30.3 Total Current Assets 171.5 168.9 176.6 182.4 Net Property, Plant & Equipment 246.2 240.6 309.6 343.5 Goodwill & Intangibles 361.9 361.9 361.9 361.9 Total Assets 779.6 771.4 848.1 887.8 Liabilities & Stockholders' Equity Accounts Payable 17.9 17.9 22.2 28.8 Accrued Compensation 6.3 6.2 7.4 7.2 Total Current Liabilities 24.2 24.1 29.6 36.0 Long-Term Debt 501.4 501.4 576.2 602.3 Total Liabilities 525.6 525.5 605.8 638.3 2019 602.8 (292.3) 310.5 (117.4) (79.8) (38.9) 74.4 (41.3) 33.1 (11.6) 21.5 56.6 $0.38 2019 80.4 87.2 34.5 202.1 351.7 361.9 915.7 31.9 9.2 41.1 602.3 643.4 DEA AN 525.6 254.0 779.6 525.5 245.9 771.4 605.8 242.3 848.1 638.3 249.5 887.8 643.4 272.3 915.7 2015 18.3 28.7 Total Liabilities Stockholders' Equity Total Liabilities & Stockholders' Equity Statement of Cash Flows Net Income Depreciation & Amortization Change in Accounts Receivable Change in Inventory Change in Pay. & Accrued Comp. Cash from Operations Capital Expenditures Cash from Investing Activ. Dividends Paid Sale (or Purchase) of Stock Debt Issuance (Pay Down) Cash from Financing Activ. Change in Cash Mydeco Stock Price 3.9 (2.9) 2.8 50.8 (26.3) (26.3) (5.4) 2016 1.9 26.9 20.0 1.9 (0.1) 50.6 (25.9) (25.9) (5.4) 2017 2.9 32.9 -0.5 4.5 5.5 45.3 (103.0) (103.0) (5.4) 2018 13.2 39.6 (5.1) (3.4) 6.4 50.7 (74.1) (74.1) (5.4) 2019 21.5 38.9 (11.5) (4.2) 5.1 49.8 (39.7) (39.7) (6.1) (6.1) (5.4) 19.1 $8.64 (5.4) 19.3 $2.81 74.8 69.4 11.7 $5.18 26.1 20.7 (2.7) $8.64 4.0 $11.15
