financial statements13

financial statements13 - Net income i $ 770,000 $ 890,000 $...

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Net income Answer: b Diff: M i . Edge Brothers recently reported net income of $385,000. The tax rate is 40 percent. The company’s interest expense was $200,000. What would have been the company’s net income if it would have been able to double its operating income (EBIT), assuming that the company’s tax rate and interest expense remain unchanged? a. $ 770,000 b. $ 890,000 c. $ 920,000 d. $1,100,000 e. $1,275,000 Net cash flow Answer: d Diff: M ii . Coolidge Cola is forecasting the following income statement: Sales $30,000,000 Operating costs excluding depreciation and amortization 20,000,000 EBITDA $10,000,000 Depreciation and amortization 5,000,000 Operating income (EBIT) $ 5,000,000 Interest expense 2,000,000 Taxable income (EBT) $ 3,000,000 Taxes (40%) 1,200,000 Net income $ 1,800,000 Assume that, with the exception of depreciation, all other non-cash revenues and expenses sum to zero. Congress is considering a proposal that will allow companies to depreciate their equipment at a faster rate. If this provision were put in place, Coolidge’s depreciation expense would be
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