Author Question: Last year, Michelson Manufacturing reported $23,150 of sales, $7,500 of operating costs other than ... (Read 61 times)

awgagawg · **on:** Aug 7, 2023

Last year, Michelson Manufacturing reported $23,150 of sales, $7,500 of operating costs other than depreciation, and $3,350 of depreciation. The company had no amortization charges, it had $4,500 of bonds outstanding that carry a 7% interest rate, and its combined federal and provincial income tax rate was 37%. This year’s data are expected to remain unchanged except for one item, depreciation, which is expected to increase by $865. By how much will the depreciation change cause the firm’s net after-tax income and its net cash flow to change? Assume for this question that the company uses the same depreciation calculations for tax and shareholder reporting purposes.

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–$524.63; $309.84

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–$536.18; $313.01

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–$544.95; $320.05

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–$552.75; $341.02

koswald · **Reply #1 on:** Aug 7, 2023

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