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

question 120

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.
$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) , 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 $7000$

-Using the information in Table 5.4, 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?

Definitions:

Deadweight Loss

A loss of economic efficiency that can occur when the optimal quantity of a good or service is not produced or traded.

Tax Per Unit

A fixed amount of tax imposed on each unit of a product or service sold.

Observable Culture

The part of organizational culture that is visible in the way members behave, and in the stories, heroes, rituals, and symbols that are part of daily organizational life.

Organization

A structured group of people working together towards a common goal, which could be corporate, governmental, or non-profit in nature.

Table 5.45.45.4 Mr Lee Is Considering a Capacity Expansion for His Supermarket

Definitions:

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