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Income versus Cash Flow. Butterfly Tractors had $14 million in sales last year. Cost of...

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Finance

Income versus Cash Flow. Butterfly Tractors had $14 million in sales last year. Cost of goods
sold was $8 million, depreciation expense was $2 million, interest payment on outstanding debt
was $1 million, and the firm's tax rate was 35%.(LO3-3)
a. What was the firm's net income?
b. What was the firm's cash flow?
c. What would happen to net income and cash flow if depreciation were increased by
$1 million?
d. Would you expect the change in depreciation to have a positive or negative impact on the
firm's stock price?
e. What would be the impact on net income if depreciation was $1 million and interest expense
was $2 million?
f. What would be the impact on cash flow if depreciation was $1 million and interest expense
was $2 million?
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