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

question 2

Multiple Choice

A start-up firm is making an initial investment in new plant and equipment.Assume that currently its equipment must be depreciated on a straight-line basis over 10 years,but Congress is considering legislation that would require the firm to depreciate the equipment over 7 years.If the legislation becomes law,which of the following would occur in the year following the change?

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

---

Definitions:

Capable of Helping

Having the ability, resources, or skills necessary to provide assistance or support to others.

Moderate Mental Health

A level of mental health with symptoms that are present but not severe enough to significantly interfere with daily functioning.

Criminal Commitment

A legal process by which individuals are detained in a mental health institution after being found guilty of a crime, due to mental illness.

Psychiatric Institution

A facility specialized in providing treatment and care for individuals with mental health disorders or illnesses.