See Table 2.5 showing financial statement data and stock price data for Mydeco Corp. Suppose Mydeco had
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See Table 2.5 showing financial statement data and stock price data for Mydeco Corp. Suppose Mydeco had purchased additional equipment for $12 million at the end of 2016, and this equipment was depreciated by $4 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?
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Mydeco Corp. 2015-2019 Income Statement Revenue Cost of Goods Sold Gross Profit Sales and Marketing Administration Depreciation & Amortization EBIT Interest Income (Expense) Pretax Income Income Tax Net Income Shares Outstanding (millions) Earnings per Share Balance Sheet Assets Cash Accounts Receivable Inventory Total Current Assets Net Property, Plant, & Equipment Goodwill & Intangibles Total Assets 2015 404.3 (188.3) 215.9 (66.7) (60.6) (27.3) 61.3 (33.7) 27.7 (9.7) 18.0 55.0 $0.33 2015 48.8 88.6 33.7 171.1 245.3 361.7 778.1 (All data as of fiscal year end; $ in millions) 2016 2017 424.6 (206.2) 218.3 363.8 (173.8) 190.0 (66.4) (59.1) (27.0) 37.4 (32.9) 4.5 (1.6) 2.9 55.0 $0.05 2016 68.8 69.8 30.9 169.4 243.2 361.7 774.3 (82.8) (59.4) (34.3) 41.8 (32.2) 9.6 (3.4) 6.2 55.0 $0.11 2017 86.2 69.8 28.4 184.4 308.9 361.7 855.0 2018 510.7 (246.8) 263.9 (102.1) (66.4) (38.4) 57.0 (37.4) 19.6 (6.9) 12.7 55.0 $0.23 2018 77.4 76.9 31.7 186.1 345.5 361.7 893.3 2019 604.1 (293.4) 310.7 (120.8) (78.5) (38.6) 72.8 (39.4) 33.4 (11.7) 21.7 55.0 $0.39 2019 84.9 86.1 35.3 206.3 347.0 361.7 914.9
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The equipment purchase does not affect net income directly however the increased ...View the full answer
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Related Book For
Fundamentals Of Corporate Finance
ISBN: 9780135811603
5th Edition
Authors: Jonathan Berk, Peter DeMarzo, Jarrad Harford
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