Butterfly Tractors had $14 million in sales last year. Cost of goods sold was $8
ID: 2699069 • Letter: B
Question
Butterfly Tractors had $14 million in sales last year. Cost of goods sold was $8 million, depreciation expense was $2 million, interest payment on outstanding debt was $1 million, and the firm%u2019s tax rate was 35%
What would happen to net income and cash flow if depreciation were increased by $1 million? (Input all amounts as positive values. Enter your answers in millions rounded to 2 decimal places.)
What would be the impact on net income and cash flow if the firm%u2019s interest expense were $1 million higher. (Input all amounts as positive values. Enter your answers in millions rounded to 2 decimal places.)
What would happen to net income and cash flow if depreciation were increased by $1 million? (Input all amounts as positive values. Enter your answers in millions rounded to 2 decimal places.)
Explanation / Answer
b)
net income decreased by 0.65 million
cash flow increases by 0.35 million
d) net income decreased by 0.65 million
cash flow remains same
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