Suppose a firm's tax rate is 25%. a. What effect would a $10.58 million operating expense have on this year's earnings? What effect would it have on next year's earnings? b. What effect would a $10.6 million capital expense have on this year's earnings if the capital expenditure is depreciated at a rate of $2.12 million per year for five years? What effect would it have on next year's earnings? a. What effect would a $10.58 million operating expense have on this year's earnings? What effect would it have on next year's earnings? (Select all the choices that apply.) A. A$10.58 million operating expense would be immediately expensed, increasing operating expenses by $10.58 million. This would lead to a reduction in taxes of 25% x$10.58 million = $2.65 million. B. A$10.58 million operating expense would be immediately expensed, increasing operating expenses by $10.58 million. This would lead to an increase in taxes of 25% x$10.58 million = $2.65 million. C. Earnings would decline by $10.58 million-$2.65 million = $7.93 million. There would be no effect on next year's earnings. D. Earnings would decline by $10.58 million-$2.65 million = $7.93 million. The same effect would be seen on next year's earnings.

Suppose a firmis tax raile is 25\% a. What etfect would a $1058 milion operating expense have on this year's earnings? What eftect would it fave on next year 's earnings? b. What effect would a $10.5 milion capital expense have on this year's earrings if the capital expenditure is depreciated at a rate of $2. 12 million per year for five years? What eflect would it have on nad years earninga? a. What effect woyld a $10,58 milicn operating expense have on this yoar's earnings? What effect would a have on next ynar's earings? (Select at the choicet that apply. ) A. A $1058 million operating expense would be inmediately wexpensed, incieasing eperating expenses by 510.5l milfion. This wosid lead to a reduction in tares af 25%510.56 millich =52,65 million B. A 51056 millon operating expense would be kmediately expensed, increasing operating expenses by 510 st mallion. This mode iead to an increase in taxes it 25051058 milion =5265 milion C. Ewnings wadd decine ty 510.58 malios $255 milion = $7.93 malion. There would the no effect on nent yeart eamings 0. Earnings would dedine by 510.58 millise -52.65 mallon = 5793 millen. The same atlect woudd be seen con neat years aarig