Result of the change in depreciation and sales

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Reference no: EM132071656

For 2005, Miami Metals reported $10,000 of sales, $6,000 of operating costs other than depreciation, and $1,500 of depreciation. The company had no amortization charges, it had $4,000 of bonds that carry a 10% interest rate, and its federal-plus-state income tax rate was 40%.

2006 data are expected to remain unchanged except for two items: depreciation, which is expected to increase by $800 and sales, which are expected to increase by 1,400.

By how much will the net income change as a result of the change in depreciation and sales? The company uses the same depreciation calculations for tax and stockholder reporting.

Write your answer as positive and in dollar terms.

Reference no: EM132071656

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