Question #$11$

See the explanation below to work the problem.

XYZ Company, a 'for$-$profit' business, had revenues of $$12$ 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.

Depreciation originally was $$1\mathrm{.}5$ million; however, a change in the depreciation schedule $($still within GAAP$)$ has now made the depreciation expense DOUBLE.

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

Choice: $$3,000,000$

Choice: $$0$

Choice: $$1,500,000$

Choice: Not enough information to tell