Last year Tiemann Technologies reported $10,500 of sales, $6,250 of operating costs other than depreciation, and $1,300 of depreciation. The company had no amortization charges, it had $5,000 of bonds that carry a 6.5% interest rate, and its federal-plus-state income tax rate was 25%. This year's data are expected to remain unchanged except for one item, depreciation, which is expected to increase by $750. By how much will net after-tax income change as a result of the change in depreciation? The company uses the same depreciation calculations for tax and stockholder reporting purposes. a. -562.50 b. -620.16 c. -534.38 d. -590.63 e. -651.16

Respuesta :

Answer:

a.-$562.5

Explanation:

Deprecation will reduce net income by ($750)

The tax impact will be 750*25%=          $187.5

Net impact on net income after tax       ( $562.5)

The answer is a.-$562.5