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    cadorsey4930's Avatar
    cadorsey4930 Posts: 2, Reputation: 1
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    #1

    Jul 11, 2010, 11:57 AM
    Finance homework
    Suppose a firm's tax rate is 35%.
    a) What effect would a $10 million operating expense have on this year's earnings? What effect would it have on next year's earnings?
    b) What effect would a $10 million capital expense have on this year's earnings if the capital is depreciated at a rate of $2 million per year for five years? What effect would it have on next year's earnings?
    Mikelreal's Avatar
    Mikelreal Posts: 32, Reputation: 2
    Junior Member
    		  
    #2

    Jul 11, 2010, 12:43 PM

    Is the tax rate constant?
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