Consider the above statement of cash flows. In 2008, AOS Industries had contemplated buying a new ...

Use the table for the question(s) below.

AOS Industries Statement of Cash Flows for 2008

Operating activities

Net Income

3.2

Depreciation and amortization

1.4

Cash effect of changes in

​

Accounts receivable

2.1

​

Accounts payable

1.1

​

Inventory

0.8

Cash from operating activities

2.8

Investment activities

Capital expenditures

2.2

Acquisitions and other investing activity

-0.4

Cash from investing activities

2.6

Financing activities

Dividends paid

-1.5

Sale or purchase of stock

2.1

Increase in short-term borrowing

1.4

Increase in long-term borrowing

3.2

Cash from financing activities

5.2

Change in Cash and Cash Equivalents

5.4

Consider the above statement of cash flows.  In 2008, AOS Industries had contemplated buying a new warehouse for $2 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 theend of the 2008?

▸ It would have $2,000,000 less cash at the end of 2008.

▸ it would have an additional $50,000 in cash at the end of 2008.

▸ It would have $1,950,000 less cash at the end of 2008.

▸ it would have $150,000 less cash at the end of 2008.