In 2019 Brandt-Leland reported $9,250,000 of sales, $6,200,000 of operating costs other than depreciation, and...
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In 2019 Brandt-Leland reported $9,250,000 of sales, $6,200,000 of operating costs other than depreciation, and $1,450,000 of depreciation. The company had no amortization charges, it had $5,000,000 of bonds (debt) that carry a 4.5% interest rate, and its federal-plus-state income tax rate was 25%. 2019 data is are expected to remain unchanged except for one item, depreciation, which is expected to increase by $137,000. By how much will the net income change as a result of the change in depreciation? The company uses the same depreciation calculations for tax and stockholder reporting. Tip: Calculate the interest expense using information provided regarding the bonds. P x R x T
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