Homework Answers
Earnings will decline by Expense(1-tax rate)
= -10.19 million (1-35%) = -$6.6235 million
i.e. -$6.62 million
No effect on next year's earnings
i.e. $0
Earnings will decline by depreciation(1-tax rate)
= -2.43 million*(1-35%)
= -$1.5795 million
Same effect on next year's earnings
i.e. -$1.5795
since depreciation will be charged every year
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