Question

A brewer is launching a new? product; brewed ginger ale with a low alcohol content. The brewer plans to spend $4 million promoting this product this? year, which is expected to expand its sales of this product to $11 million this year and $8 million next year. They do expect there will be loss of sales of $3 million this year and next year in their other products as customers switch to drinking the new ginger ale. The gross profit margin for the new ginger ale is? 40%, the gross profit margin of all of the? brewer's other products is? 30%, and the? brewer's marginal corporate tax rate is? 35%. What are incremental earnings arising from the promotional campaign this? year?

A.$0.84million

B.$1.40million

C.$ 4.40million

D.$1.56million

Answer 1

Answer -A

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