Question

Suppose Congress changes the tax laws so that a firm’s depreciation expense is cut in half. (The firm’s percentage tax rate does not change, however.) Assuming there are no changes in sales, other operating costs, or interest charges, the firm’s net income will ________, and its cash flow will ________.

Answer 1

Correct answer is "decrease / increase"

Step-by-step explanation:

Depreciation is a kind of cost that is used to lower the carrying price of

a resource. It is an approximate price that is planned rather than a clear

payment.

The application of a depreciation system permit the company to price the value of a benefit over time while decreasing the carrying cost of the benefit.