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Earnings will Increase/Decrease

Earnings will Increase/Decrease

Essentials Of Investments
Essentials Of Investments
11th Edition
ISBN:9781260013924
Author:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.
Publisher:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.
Chapter1: Investments: Background And Issues
Section: Chapter Questions
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Nokela Industries purchases a $40.8 million cyclo-converter. The cyclo-converter will be depreciated by $10.2 million per year over four years, starting this year. Suppose Nokela's tax rate is 25%. a. What impact will the cost of the purchase have on earnings for each of the next four years? b. What impact will the cost of the purchase have on the firm's cash flow for the next four years? a. What impact will the cost of the purchase have on earnings for each of the next four years? Earnings will by $ b. What impact will the cost of the purchase have on the firm's cash flow for the next four years? The impact on the firm's cash flow in year 1 is $ million. (Round to one decimal place.) The impact on the firm's cash flow in years two through four is $ million each year for four years. (Select from the drop-down menu and round to one decimal place.) million. (Round to one decimal place.)
Transcribed Image Text:Nokela Industries purchases a $40.8 million cyclo-converter. The cyclo-converter will be depreciated by $10.2 million per year over four years, starting this year. Suppose Nokela's tax rate is 25%. a. What impact will the cost of the purchase have on earnings for each of the next four years? b. What impact will the cost of the purchase have on the firm's cash flow for the next four years? a. What impact will the cost of the purchase have on earnings for each of the next four years? Earnings will by $ b. What impact will the cost of the purchase have on the firm's cash flow for the next four years? The impact on the firm's cash flow in year 1 is $ million. (Round to one decimal place.) The impact on the firm's cash flow in years two through four is $ million each year for four years. (Select from the drop-down menu and round to one decimal place.) million. (Round to one decimal place.)
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