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  1. business
  2. accounting
  3. b. suppose both firms have identified a new projec

b. Suppose both firms have identified a new project that will increase taxable income by...

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Accounting

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b. Suppose both firms have identified a new project that will increase taxable income by $10,000. How much in additional taxes will each firm pay? Why is this amount the same? 19. Net Income and OCF [L02] During 2010, Raines Umbrella Corp. had sales of X $850,000. Cost of goods sold, administrative and selling expenses, and deprecia tion expenses were $610,000, $110,000, and $140,000, respectively. In addition, the company had an interest expense of $85,000 and a tax rate of 35 percent. (Ignore any tax loss carryback or carryforward provisions.) a. What is Raines's net income for 2010? b. What is its operating cash flow? c. Explain your results in (a) and (b) Accounting Values versus Cash Flows [LO4] In Problem 19, suppose Raines Umbrella Corp. paid out $63,000 in cash dividends. Is this possible? If spending on net fixed assets and net working capital was zero, and if no new stock was issued during the year, what do you know about the firm's long-term debt account? 20

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