In: Finance
Suppose a firm's tax rate is 35 %
. a. What effect would a $ 9.83 million operating expense have on this year's earnings? What effect would it have on next year's earnings?
b. What effect would an $ 11.55 million capital expense have on this year's earnings if the capital is depreciated at a rate of $ 2.31 million per year for five years? What effect would it have on next year's earnings?