Which of the Following Would Be Most Likely to Occur

question 23

Multiple Choice

Which of the following would be most likely to occur in the year after Congress,in an effort to increase tax revenue,passed legislation that forced companies to depreciate equipment over longer lives? Assume that sales,other operating costs,and tax rates are not affected,and assume that the same depreciation method is used for tax and stockholder reporting purposes.

• A) Companies' reported net incomes would decline.
• B) Companies' net operating profits after taxes (NOPAT)would decline.
• C) Companies' physical stocks of fixed assets would increase.
• D) Companies' net cash flows would increase.
• E) Companies' cash positions would decline.

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Definitions:

Futures Contract

A legally binding contract to acquire or dispose of a specific item at an agreed-upon price at a future date.

Contract Size

Refers to the deliverable quantity of commodities or financial instruments like futures and options contracts specified in the contract terms.

Acceptable Grade

A term that might refer to a minimum satisfactory academic or performance level, but could require more context to define precisely.

Settlement Price

The official price at the close of a trading session on a futures exchange, used for determining margin requirements and the next day's price limits.