Innovative Inc A) Less Than or Equal to 40 Million
B) More

question 136

Multiple Choice

Innovative Inc.is experiencing a boom for the products it has introduced recently.The estimated annual sales projected for the next five years are given below.The current capacity is equivalent to only $100 million sales.The company is considering the alternative of expanding capacity to an equivalent of $250 million sales.Assume a 25 percent pretax profit margin.What is the increase in total pretax cash flow (summed over all years) that would be enjoyed because of the expansion?
$$\begin{array} { | c | c | } \hline \text { Year } & \begin{array} { c } \text { Annual Sales } \\\text { (in \$million) }\end{array} \\\hline 1 & 100 \\2 & 140 \\3 & 170 \\4 & 200 \\5 & 250 \\\hline\end{array}$$

• A) less than or equal to 40 million
• B) more than 40 million but less than or equal to 70 million
• C) more than 70 million but less than or equal to 100 million
• D) more than 100 million

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