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                             TABLE 2.5                  Income Statement  .

Question:

                      
      TABLE 2.5                 
Income Statement   2015   2016   2017   2018   2019  
Revenue   405.5   363.6   419.6   509.2   602.3  
Cost of Goods Sold   (184.2)   (172.1)   (206.0)   (243.4)   (296.0)  
Gross Profit   221.3   191.5   213.6   265.8   306.3  
Sales and Marketing   (68.6)   (67.3)   (84.0)   (100.5)   (121.0)  
Administration   (61.8)   (60.1)   (58.6)   (67.5)   (78.2)  
Depreciation & Amortization   (25.6)   (25.7)   (35.5)   (38.5)   (37.7)  
EBIT   65.3   38.4   35.5   59.3   69.4  
Interest Income (Expense)   (31.8)   (33.4)   (30.9)   (38.0)   (39.3)  
Pretax Income   33.5   5.0   4.6   21.3   30.1  
Income Tax   (11.7)   (1.8)   (1.6)   (7.5)   (10.5)  
Net Income   21.8   3.2   3.0   13.8   19.6  
Shares outstanding (millions)   54.7   54.7   54.7   54.7   54.7  
Earnings per share   $0.40   $0.06   $0.05   $0.25   $0.36  
Balance Sheet   2015   2016   2017   2018   2019  
Assets                      
Cash   50.1   73.4   88.4   77.6   85.8  
Accounts Receivable   90.4   69.2   69.9   78.7   84.4  
Inventory   35.2   32.1   27.6   30.3   35.9  
Total Current Assets   175.7   174.7   185.9   186.6   206.1  
Net Property, Plant & Equip.   244.8   246.1   306.7   347.5   349.6  
Goodwill & Intangibles   356.7   356.7   356.7   356.7   356.7  
Total Assets   777.2   777.5   849.3   890.8   912.4  
Liabilities & Stockholders' Equity                      
Accounts Payable   18.5   19.8   23.7   24.9   31.7  
Accrued Compensation   7.5   5.8   6.5   8.7   9.5  
Total Current Liabilities   26.0   25.6   30.2   33.6   41.2  
Long-term Debt   497.9   497.9   573.7   598.9   598.9  
Total Liabilities   523.9   523.5   603.9   632.5   640.1  
Stockholders' Equity   253.3   254.0   245.4   258.3   272.3  
Total Liabilities & Stockholders' Equity   777.2   777.5   849.3   890.8   912.4  
Statement of Cash Flows   2015   2016   2017   2018   2019  
Net Income   21.8   3.2   3.0   13.8   19.6  
Depreciation & Amortization   25.6   25.7   35.5   38.5   37.7  
Chg. in Accounts Receivable   3.9   21.2   -0.7   (8.8)   (5.7)  
Chg. in Inventory   (2.9)   3.1   4.5   (2.7)   (5.6)  
Chg. in Pay. & Accrued Comp.   2.6   (0.4)   4.6   3.4   7.6  
Cash from Operations   51.0   52.8   46.9   44.2   53.6  
Capital Expenditures   (25.4)   (24.1)   (102.3)   (74.8)   (39.8)  
Cash from Investing Activ.   (25.4)   (24.1)   (102.3)   (74.8)   (39.8)  
Dividends Paid   (5.4)   (5.4)   (5.4)   (5.4)   (5.6)  
Sale (or purchase) of stock   -   -   -   -   -  
Debt Issuance (Pay Down)   -   -   75.8   25.2   -  
Cash from Financing Activ.   (5.4)   (5.4)   70.4   19.8   (5.6)  
Change in Cash   20.2   23.3   15.0   (10.8)   8.2  
Mydeco Stock Price   $8.89   $4.21   $4.66   $9.51   $12.19   

See Table 2.5 3 showing financial statement data and stock price data for Mydeco Corp. Suppose Mydeco had purchased additiona

See Table 2.5 3 showing financial statement data and stock price data for Mydeco Corp. Suppose Mydeco had purchased additional equipment for $12.6 million at the end of 2016, and this equipment was depreciated by $4.2 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? (Assume the equipment is paid for out of cash and that Mydeco earns no interest on its cash balances.) Calculate the new net income below: (Round to one decimal place.) (millions) Year 2016 Net Income Additional Depreciation Tax Savings New Net Income

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