|Change in Net Income||-545.35|
While EBIT decreases by as much as $839 due to increase in Depreciation expense, the Net Income falls only by $545.35 because of the effect of Tax Shield on Depreciation expense.
Value of Tax Shield = Tax rate*(Increase in Depreciation) = 35%*$839 = $293.65
Hence, net income falls by (Increase in depreciation expense - value of tax shield) = $839 - $293.65 = $545.35
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