The signal company has operating income

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Reference no: EM131966680

The signal company has operating income of $600,000. The company's depreciation expense is $100,000 and it has a 40% tax rate.

A. If the company is 100% equity financed, calculate its net income and cash flow.

B. If the company (instead) has $50,000 in annual interest expense, recalculate the net income and cash flow.

C. Explain the difference in your answers to Parts A & B -- specifically, reconcile the change in cash flow that occurred.

Reference no: EM131966680

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