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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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