A Start-Up Firm Is Making an Initial Investment in New

question 38

Multiple Choice

A start-up firm is making an initial investment in new plant and equipment. Currently equipment is depreciated on a straight line basis over 10 years. Assume that Congress is considering legislation which will allow the corporation to depreciate the equipment over 7 years. If the legislation becomes law, and the firm implements the 7-year depreciation basis, which of the following will occur?

• A) The firm's tax payments will increase.
• B) The firm's net income will increase.
• C) The firm's taxable income will increase.
• D) The firm's net cash flow will increase.
• E) The firm's operating income (EBIT) will increase.

---

Definitions:

Defined Demographically

A method of segmenting a market based on variables such as age, gender, income, education level, and family size.

Ethnographic Research

A qualitative research method that involves observing and interacting with participants in their real-life environment to gain deep insights into their cultures, behaviors, and attitudes.

Depth Interviews

A qualitative research method involving detailed, one-on-one discussions to explore deeper insights into an individual's attitudes, beliefs, or behaviors.

Social Media

Online platforms that enable users to create, share content, or participate in social networking.