DeYoung Devices Inc

question 47

Multiple Choice

DeYoung Devices Inc., a new high-tech instrumentation firm, is building and equipping a new manufacturing facility. 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 reported net income would increase.
• B) the firm's operating income (ebit) would increase.
• C) the firm's taxable income would increase.
• D) the firm's net cash flow would increase.
• E) the firm's tax payments would increase.

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