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

question 15

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 now the company is allowed to depreciate the equipment over 7 years.What would occur in the year following the change?

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

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Definitions:

Respondeat Superior

A judicial principle that assigns legal liability to an employer or principal for the wrongful actions performed by an employee or agent, providing these actions happened in the course of their employment or representation.

Vicarious Liability

A legal principle where one party is held responsible for the actions or omissions of another, such as an employer for the actions of an employee.

Doctrine Of Respondeat Superior

A legal doctrine that holds an employer or principal liable for the wrongdoings or actions of an employee or agent, when such acts occur within the scope of employment or agency.

Marble Staircase

An architectural feature made of marble, often seen as a symbol of luxury and elegance in building design.