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.

---

Definitions:

Ages

Different stages of human life categorized by chronological years.

Left Handedness

Refers to the preference of using the left hand for tasks such as writing and eating, typically related to brain hemisphere dominance.

Prevalent

Widely existing or occurring, often dominating in a particular area or field.

Girls

are female children and adolescents, defined biologically but also shaped by social and cultural factors.