Table 44
Mr -Using the Information in Table 4

question 4

Multiple Choice

Table 4.4
Mr. Lee is considering a capacity expansion for his supermarket. The annual sales projected for the next five years follow. The current capacity is equivalent to $300,000 sales. Assume a 20 percent pretax profit margin.
$$\begin{array} { | c | c | } \hline \text { Year } & \begin{array} { c } \text { Annual Sales } \\( \$ 000 ) \end{array} \\\hline 1 & 310 \\2 & 320 \\3 & 340 \\4 & 370 \\5 & 400 \\\hline\end{array}$$
-Using the information in Table 4.4,if Lee expands the capacity to an equivalent of $360,000 sales now (year 0) ,how much would pretax cash flow in year 1 increase because of this expansion?

• A) less than $3000
• B) more than $3000 but less than $5000
• C) more than $5000 but less than $7000
• D) more than $7000

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Definitions:

Discretion

The quality of behaving or speaking in such a way as to avoid causing offense or revealing confidential information.

Decentralization

the process of distributing or dispersing functions, powers, people or things away from a central location or authority.

Network of Relationships

A complex set of connections between individuals or entities that interact with each other in various ways.

Critical Competence

Essential skills or capabilities necessary for effectively performing a specific job or task.