Question

In: Finance

Suppose a​ firm's tax rate is 35%. a. What effect would a $9.85 million operating expense...

Suppose a​ firm's tax rate is 35%.

a. What effect would a $9.85 million operating expense have on this​ year's earnings? What effect would it have on next​ year's earnings?

b. What effect would a $9.25 million capital expense have on this​ year's earnings if the capital is depreciated at a rate of $1.85 million per year for five​ years? What effect would it have on next​ year's earnings?

Solutions

Expert Solution

AS NOTHING WAS MENTIONED ABOUT ROUNDING. FULL 4 DECIMALS ARE TAKEN

IF WE ROUND TO 2 DECIMALS, ANSWERS WILL BE

ANSWER a : (i) 6.40 (ii) NO EFFECT

ANSWER b : (i)1.20 (ii) 1.20

jeff jeffy answered 4 months ago
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