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 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?

Select one:

a. The firms operating income (EBIT) would increase.

b. The firms tax payments would increase.

c. The firms net cash flow would decrease.

d. The companys depreciation would increase.

e. The firms taxable income would increase.