Changes in net income as result of change in depreciation

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A firm’s sales = $20 million, operating costs other than depreciation = $12 million, and depreciation = $2.00 million. It had $8 million of bonds outstanding (long term debt) with a 5.0% interest rate, and its tax rate = 40%. This year's data will remain unchanged except depreciation. In the new year, depreciation will increase by $0.50 million. Calculate the changes in net income as a result of the change in depreciation, in millions.

Reference no: EM131520756

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