Essentials Of Investments
11th Edition
ISBN: 9781260013924
Author: Bodie, Zvi, Kane, Alex, MARCUS, Alan J.
Publisher: Mcgraw-hill Education,
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Income and Cash Flow Analysis. The Berndt Corporation expects to have sales of $12 million. Costs other than
- Set up an income statement. What is Berndt’s expected net income? Its expected net cash flow?
- Suppose Congress changed the tax laws to double Berndt’s depreciation expenses. No changes in operations occurred. What would happen to reported profit and net cash flow?
- Now, suppose that Congress changed the tax laws such that, instead of doubling Berndt’s depreciation, it was reduced by 50%. How would profit and net cash flow be affected?
- If this were your company, would you prefer Congress to cause your depreciation expense to be doubled or halved? Why?
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