A firm is evaluating a new machine to replace an existing, older machine. The old (existing) machine is being depreciated at $20,000 per year, whereas the new machines depreciating will be $18,000. The firms marginal tax rat is 30%. Everything else equal, if the new machine is purchased, what effect will the change in depreciation have on the firms incremental operating cash flows ?

A. There should be no effect on the firms cash flow, because depreciation is a noncash expense

B. Operating cash flows will increase by $2,000

C. Operating cash flows will increase by $1,400

D. Operating cash flows will decrease by $600

E. None of above is correct