Income and Cash Flow Analysis

The Berndt Corporation expects to have sales of $$12$ million. Costs other than depreciation are expected to be $75\%$ of sales, and depreciation is expected to be $$1\mathrm{.}5$ million. All sales revenues will be collected in cash, and costs other than depreciation must be paid for during the year. The federal tax rate is $21\%($ignore any possible state corporate taxes$).$ Berndt has no debt. a$.$ Set up an income statement. What is Berndt$$s expected net income? Its expected net cash flow?

b$.$ Suppose Congress changed the tax laws so that Berndt$$s depreciation expenses doubled. No changes in operations occurred. What would happen to reported profit and to net cash flow?