Depreciation change cause net cash flow to change


Q1) For 2005, Omega Metals reported $9,000 of sales, $6,000 of operating costs other than depreciation, and $1,500 of depreciation. Company had no amortization charges, it had issued $4,000 of bonds which carry 7% interest rate, and its federal-plus-state income tax rate was= 20%.  2006 data are expected to remain unchanged except for one item, depreciation, that is expected to rise by $1,000. By how much will depreciation change cause net cash flow to change? Note that company uses same depreciation for tax and stockholder reporting. Be careful to record whether change is positive or negative.

Request for Solution File

Ask an Expert for Answer!!
Accounting Basics: Depreciation change cause net cash flow to change
Reference No:- TGS017798

Expected delivery within 24 Hours