Question #$11$

See the explanation below to work the problem.

XYZ Company, a 'for$-$profit' business, had revenues of $$16$ million in $2022.$ Expenses other than depreciation totaled $75$ percent of revenues. XYZ Company, must pay taxes at a rate of $40$ percent of pretax $($operating$)$ income. All revenues were collected in cash during the year, and all expenses other than depreciation were paid in cash.

Due to a change in the company's accounting guidelines, the organization will now be more conservative in its depreciation estimation. Depreciation expense was was originally was $$2$ million; however, now the depreciation expense of its capital assets will only be $$750,000.$

Based on this change in depreciation expense, what would XYZ$\text{'}$s net income be$?$

Choice: $$875,000$

Choice: $$1,350,000$

Choice: $$1,950,000$

Choice: $$2,000,000$