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Nokela Industries purchases a $43.6 million cyclo-converter. The cyclo-converter will be depreciated by $7.27 million per year over 6 years, starting this year. Suppose Nokela's
Nokela Industries purchases a
$43.6
million cyclo-converter. The cyclo-converter will be depreciated by
$7.27
million per year over
6
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
6
years?
b. What impact will the cost of the purchase have on the firm's cash flow for the next
6
years?
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