Unstable Ltd Has Decided to Change Its Depreciation Method from Straight-Line

question 24

Multiple Choice

Unstable Ltd has decided to change its depreciation method from straight-line to reducing balance.As a result,its annual depreciation expense increases by $200 000.The company's income tax rate is 30 per cent.
-What is the effect on the debt-to-equity ratio?

• A) It increases.
• B) It decreases.
• C) There is no effect.
• D) It cannot be determined from the information provided.

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