Grommit engineering expects to have net income

Reference no: EM131012999

Grommit Engineering expects to have net income next year of $20.75 million and free cash flow of $22.15 million. Grommit's marginal corporate tax rate is 35%.

a. If Grommit increases leverage so that its interest expense rises by $1 million, how will its net income change?

b. For the same increase in interest expense, how will free cash flow change?

Reference no: EM131012999

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