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Nokela Industries purchases a $40.4 million cyclo-converter. The cyclo-converter will be depreciated by $10.1 million per year over four years, starting this year. Suppose Nokela's

Nokela Industries purchases a

$40.4

million cyclo-converter. The cyclo-converter will be depreciated by

$10.1

million per year over four years, starting this year. Suppose Nokela's tax rate is

40%.

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?

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