Question

                      
      TABLE 2.5                 
Income Statement   2015   2016   2017   2018   2019  
Revenue   405.5   363.6   419.6   509.2   602.3  
Cost of Goods Sold   (184.2)   (172.1)   (206.0)   (243.4)   (296.0)  
Gross Profit   221.3   191.5   213.6   265.8   306.3  
Sales and Marketing   (68.6)   (67.3)   (84.0)   (100.5)   (121.0)  
Administration   (61.8)   (60.1)   (58.6)   (67.5)   (78.2)  
Depreciation & Amortization   (25.6)   (25.7)   (35.5)   (38.5)   (37.7)  
EBIT   65.3   38.4   35.5   59.3   69.4  
Interest Income (Expense)   (31.8)   (33.4)   (30.9)   (38.0)   (39.3)  
Pretax Income   33.5   5.0   4.6   21.3   30.1  
Income Tax   (11.7)   (1.8)   (1.6)   (7.5)   (10.5)  
Net Income   21.8   3.2   3.0   13.8   19.6  
Shares outstanding (millions)   54.7   54.7   54.7   54.7   54.7  
Earnings per share   $0.40   $0.06   $0.05   $0.25   $0.36  
Balance Sheet   2015   2016   2017   2018   2019  
Assets                      
Cash   50.1   73.4   88.4   77.6   85.8  
Accounts Receivable   90.4   69.2   69.9   78.7   84.4  
Inventory   35.2   32.1   27.6   30.3   35.9  
Total Current Assets   175.7   174.7   185.9   186.6   206.1  
Net Property, Plant & Equip.   244.8   246.1   306.7   347.5   349.6  
Goodwill & Intangibles   356.7   356.7   356.7   356.7   356.7  
Total Assets   777.2   777.5   849.3   890.8   912.4  
Liabilities & Stockholders' Equity                      
Accounts Payable   18.5   19.8   23.7   24.9   31.7  
Accrued Compensation   7.5   5.8   6.5   8.7   9.5  
Total Current Liabilities   26.0   25.6   30.2   33.6   41.2  
Long-term Debt   497.9   497.9   573.7   598.9   598.9  
Total Liabilities   523.9   523.5   603.9   632.5   640.1  
Stockholders' Equity   253.3   254.0   245.4   258.3   272.3  
Total Liabilities & Stockholders' Equity   777.2   777.5   849.3   890.8   912.4  
Statement of Cash Flows   2015   2016   2017   2018   2019  
Net Income   21.8   3.2   3.0   13.8   19.6  
Depreciation & Amortization   25.6   25.7   35.5   38.5   37.7  
Chg. in Accounts Receivable   3.9   21.2   -0.7   (8.8)   (5.7)  
Chg. in Inventory   (2.9)   3.1   4.5   (2.7)   (5.6)  
Chg. in Pay. & Accrued Comp.   2.6   (0.4)   4.6   3.4   7.6  
Cash from Operations   51.0   52.8   46.9   44.2   53.6  
Capital Expenditures   (25.4)   (24.1)   (102.3)   (74.8)   (39.8)  
Cash from Investing Activ.   (25.4)   (24.1)   (102.3)   (74.8)   (39.8)  
Dividends Paid   (5.4)   (5.4)   (5.4)   (5.4)   (5.6)  
Sale (or purchase) of stock   -   -   -   -   -  
Debt Issuance (Pay Down)   -   -   75.8   25.2   -  
Cash from Financing Activ.   (5.4)   (5.4)   70.4   19.8   (5.6)  
Change in Cash   20.2   23.3   15.0   (10.8)   8.2  
Mydeco Stock Price   $8.89   $4.21   $4.66   $9.51   $12.19   

See Table 2.5 3 showing financial statement data and stock price data for Mydeco Corp. Suppose Mydeco had purchased additional equipment for $12.6 million at the end of 2016, and this equipment was depreciated by $4.2 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

Answer 1

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ACCOUNTS latest - Microsoft Excel (Product Activation Failed) Formulas File Home Insert Page Layout Data Review View Add-Ins Z AutoSum Cut A A Wrap Text Calibri 11 General E Copy Fill BI U Merge & Center Paste Conditional Format Cell Insert Delete Format Sort & Find & % Format Painter Clear Filter Select Formatting as Table Styles Clipboard Font Alignment Number Styles Cells Editing fox N223 М Q R S U 214 215 2016 2017 2018 2019 net income 216 3.2 3 13.8 19.6 additional depreciation tax savings 217 LESS 0 4.2 4.2 4.2 218 ADD 0 1.47 1.47 1.47 219 ANSWER new net income 3.2 0.27 11.07 16.87 220 221 222 223 224 225 226 227 228 229 230 231 budget VARIANCE DIFF ANALYSIS 45 days BEP, OL FL float B-S profit loss SALES BUDGET cycle ove FIFO ROE, BV MV ratio dupont CASH BUDGET ratios DETROIT Rea erences 140% WA 04:54 TENG 31-10-2019