CathFoods Will Release a New Range of Candies Which Contain

question 95

Multiple Choice

CathFoods will release a new range of candies which contain anti-oxidants.New equipment to manufacture the candy will cost $2 million,which will be depreciated by straight-line depreciation over five years.In addition,there will be $5 million spent on promoting the new candy line.It is expected that the range of candies will bring in revenues of $4 million per year for five years with production and support costs of $1.5 million per year.If CathFood's marginal tax rate is 35%,what are the incremental earnings in the second year of this project?

• A)$1.365 million
• B)$1.500 million
• C)$1.753 million
• D)$2.100 million

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Definitions:

Heterotrophs

Organisms that cannot synthesize their own food and rely on other organisms for nutrients.

Ecosystem Function

The natural processes and interactions that maintain the biodiversity and balance within an ecosystem, such as nutrient cycling and energy flow.

Decomposers

Organisms that break down dead or decaying organisms, and in doing so, carry out the natural process of decomposition.

Photosynthesis

Process, usually occurring within chloroplasts, that uses solar energy to reduce carbon dioxide to carbohydrate.