Consider the above statement of cash flows. (Multiple Questions)

[saliriagwu]

Use the table for the question(s) below.

AOS Industries Statement of Cash Flows for 2008

Operating activities

Net Income

3.2

Depreciation and amortization

1.4

Cash effect of changes in

​

Accounts receivable

2.1

​

Accounts payable

1.1

​

Inventory

0.8

Cash from operating activities

2.8

Investment activities

Capital expenditures

2.2

Acquisitions and other investing activity

-0.4

Cash from investing activities

2.6

Financing activities

Dividends paid

-1.5

Sale or purchase of stock

2.1

Increase in short-term borrowing

1.4

Increase in long-term borrowing

3.2

Cash from financing activities

5.2

Change in Cash and Cash Equivalents

5.4

Consider the above statement of cash flows.  In 2008, AOS Industries had contemplated buying a new warehouse for $2 million, the cost of which would be depreciated over 10 years.  If AOS Industries has a tax rate of 25%, what would be the impact for the amount of cash held by AOS at theend of the 2008?
◦ It would have $2,000,000 less cash at the end of 2008.
◦ it would have an additional $50,000 in cash at the end of 2008.
◦ It would have $1,950,000 less cash at the end of 2008.
◦ it would have $150,000 less cash at the end of 2008.

[sultansheikh]

It would have $1,950,000 less cash at the end of 2008.