1. Lion, Incorporated has 1 million common shares outstanding and a stock price of $35 per share. The company uses the straight-line method of depreciation to depreciate its fixed assets, and reports net income of $5,000,000. If the company used the double-declining balance method of depreciation, its depreciation expense would increase by $500,000. How would the company's price-to-earnings (P/E) ratio change if the company used the double-declining balance method to compute its depreciation expense? Assume that there is no change in the company's current tax rate of 30%.

   	a.	The company's new P/E ratio would be 7.0.
   	b.	The company's new P/E ratio would be 7.8.
   	c.	The company's new P/E ratio would be 7.3.
   	d.	The company's new P/E ratio would be 7.5.