Table $5.4$ Mr Lee Is Considering a Capacity Expansion for His Supermarket

question 39

Multiple Choice

Table $5.4$
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.


-Using the information in Table 5.4, if Lee expands the capacity to an equivalent of $360,000 sales now (year 0) , and then expands the capacity to an equivalent of $400,000 sales at the beginning of year 4, how much would pretax cash flow increase in total for all years (years 1 through 5) ?

• A) less than $30,000
• B) more than $30,000 but less than $40,000
• C) more than $40,000 but less than $50,000
• D) more than $50,000

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Definitions:

Punishment

A consequence applied with the intent of reducing the occurrence of an undesirable behavior.

Positive Punishment

Adding an unpleasant stimulus in response to a behavior to decrease the likelihood of that behavior happening in the future.

Negative Punishment

A behavioral modification technique where a desirable stimulus is removed following an unwanted behavior, decreasing the likelihood of that behavior occurring again.

Mild Punishers

Interventions or consequences designed to decrease a behavior's occurrence, which are not severe or harsh.