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Uhler Manufacturing has income of $25,000. The cost of equity is 20% and the book...

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Question

Accounting

Uhler Manufacturing has income of $25,000. The cost of equity is 20% and the book value(t-1) is $125,000. Uhler believes that they can eliminate costs by $5,000, raising the income. By how much will the abnormal earning change if Uhler eliminates the costs?

increase $4,000

increase $5,000

decrease $4,000

no change

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