IN 300 Fall 2018 Stelk Homework: Chapter 2 Homework Problems Save Score: 0 of 1
ID: 2329174 • Letter: I
Question
IN 300 Fall 2018 Stelk Homework: Chapter 2 Homework Problems Save Score: 0 of 1 pt 8 of 20 (6 complete) Hw Score: 24.67%, 4.93 of P 2-13 (similar to) Question Help * Suppose a firm's tax rate is 35%. effect would a $9.92 million operating expense have on this year's earnings? What effect would t have on next year's earnings? b. What effect would a $10.35 million capital expense have on this year's earnings if the capital is depreciated at a rate of $2.07 million per year for five years? What effect would it have on next year's earnings? a. What effect would a $9.92 million operating expense have on this year's earnings? Earmings would increase (decline) by s million. (Round to two decimal places, and use a negative number for a decline.) Enter your answer in the answer box and then click Check Answer 2Explanation / Answer
a)Answer- (-6.45 million)
If operating profit increase by 9.92 million, the net profit before tax will decrease by $9.92 M and after tax earnings will decrease by $9.92M x (1-.0.35)
next year's opening balance of earnings will be decreased by 6.45M and no impact on next years earnings
b) both current year's and next years earnings will be decreased by $1.35M