Butterfly Tractors sold $17.00 million last year. The cost of goods sold was $8.60 million, the depreciation expense was $2.60 million, the interest payment on outstanding debt was $1.60 million, and the firm's tax rate was 35%. 

a. What was the firm's net income and net cash flow? 

 b. What happens to net income and cash flow if depreciation is increased by $1.60 million? 

c. Would you expect the change in income and cash flow to have a positive or negative effect on the firm's stock price? 

d. $1.60 million in depreciation and interest expense 2, What would be the impact on net income if it were $60 million?

 e. What would be the effect on cash if depreciation was $1.60 million and interest expense was $2.60 million?

Answer rating: 100% (QA)

a To calculate the firms net income and net cash flow we can use the following formulas Net Income S... View the full answer