Suppose a firm's tax rate is
25%.
a. What effect would a
$9.57
million operating expense have on this year's earnings? What effect would it have on next year's earnings?
b. What effect would
an
$11.10
million capital expense have on this year's earnings if the capital is depreciated at a rate of $2.22
million per year for five years? What effect would it have on next year's earnings?
