AOS Industries Statement of Cash Flows for 2008 Investment

question 18

Multiple Choice

AOS Industries Statement of Cash Flows for 2008 Investment activities
Financing activities
Consider the above statement of cash flows. In 2008, AOS Industries had contemplated buying a new warehouse for $3 million, the cost of which would be depreciated over 10 years. If AOS Industries has a tax rate of 25%, what would be the impact for the amount of cash held by AOS at the end of the 2008?

• A) It would have $3,000,000 less cash at the end of 2008.
• B) It would have $2,925,000 less cash at the end of 2008.
• C) It would have $1,500,000 less cash at the end of 2008.
• D) It would have an additional $7,500,000 in cash at the end of 2008.

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Definitions:

Capital Stock

The total amount of shares that a corporation is authorized to issue, as represented in its financial statements.

Commission Charges

Fees paid for services, usually a percentage of the transaction made or handled by a service provider.

Dollar Amount

The numeric monetary value or cost expressed in terms of dollars.

Capital Stock

The total amount of a company's shares of stock that have been authorized, issued, and purchased by investors, representing ownership in the company.