Suppose a firm's tax rate is

25%.

a. What effect would a

$9.55

million operating expense have on this year's earnings? What effect would it have on next year's earnings?b. What effect would

a

$7.65

million capital expense have on this year's earnings if the capital is depreciated at a rate of

$1.53

million per year for five years? What effect would it have on next year's earnings?

a. What effect would a

$9.55

million operating expense have on this year's earnings?Earnings would increase (decline) by

$enter your response here

million. (Round to two decimal places, and use a negative number for a decline.)

What effect would it have on next year's earnings? (Select the best choice below.)

A.Next year's earnings will be affected by an increase of

$2.39

million.

B.

Next year's earnings will be affected by the same amount.

C.Next year's earnings will be affected by a decline of

$2.39

million.

D.

There would be no effect on next year's earnings.

b. What effect would

a

$7.65

million capital expense have on this year's earnings if the capital is depreciated at a rate of

$1.53

million per year for five years? What effect would it have on next year's earnings?Earnings would be higher (lower) each year by

$enter your response here

million. (Round to two decimal places, and use a negative number for a decline.)