during the year. The federal tax rate is 21% (ignore any possible state corporate taxes). Berndt has no debt. Net income: \$ Net cash flow: $ b. Suppose Congress changed the tax laws so that Bemdt's depreciation expenses doubled. No changes in operations occurred. What would happen to reported profit and to net cash flow? I. If depreciation doubled, taxable income would not be affected since depreciation and amortization are non-cash expenses. Net cash flow would also be unaffected. II. If depreciation doubled, taxable income would not be affected since depreciation and amortization are non-cash expenses. Net cash flow would double. III. If depreciation doubled, taxable income would fall to zero, taxes would be zero, and net cash flow would be unaffected. IV. If depreciation doubled, taxable income would fall to zero, taxes would be zero, and net cash flow would rise. V. If depreciation doubled, taxable income would fall to zero, taxes would be zero, and net cash flow would decline. c. Now suppose that Congress changed the tax law such that, instead of doubling Berndt's depreciation, it was reduced it by 50%. How would profit and net cash flow be affected? I. If depreciation were halved, taxable income, taxes, and net cash flow would all decline. II. If depreciation were halved, taxable income and net cash flow would rise but taxes would fall. III. If depreciation were halved, taxable income and taxes would rise but net cash flow would fall. IV. If depreciation were halved, taxable income, taxes, and net cash flow would all rise. v. If depreciation were halved, taxable income and taxes would decline but net cash flow would rise. d. If this were your company, would you prefer Congress to cause your depreciation expense to be doubled or halved? Why