Question
Assume that a firm has just completed Year 2002 (its second year of operations) and depreciated its fixed assets on a 20-year straight-line basis. Also
Assume that a firm has just completed Year 2002 (its second year of operations) and depreciated its fixed assets on a 20-year straight-line basis. Also assume that the firm is profitable (positive net income), makes no additional investment in fixed assets during Year 2003, and that all other factors (sales, other expenses, interest, current assets and liabilities, etc.) are constant from Year 2002 through Year 2003, but that there may be changes in the firm's equity account. Which of the following would you most expect to observe, comparing results for Year 2002 to Year 2003, if the firm changes its depreciable life assumption from 20 years to 10 years for Year 2003?\ Net operating profit after tax (NOPAT) would increase\ Net operating working capital (NOWC) would decrease.\ Operating cash flow (OCF) would decrease.\ Net income (NI) would increase.\ Total operating capital (TOC) would decrease.
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