CathFoods Will Release a New Range of Candies Which Contain

question 89

Multiple Choice

CathFoods will release a new range of candies which contain antioxidants.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 free cash flows in the second year of this project?

• A)$1.765 million
• B)$2.015 million
• C)$2.415 million
• D)$2.500 million

---

Definitions:

Lean Business Model

A strategy focused on creating value for customers with minimal waste and resources, emphasizing flexibility and efficiency.

Multi-Dimensional Performance

An approach to evaluation that considers various aspects of performance, such as efficiency, effectiveness, and quality, across different domains or dimensions.

Just In Time

An inventory management strategy where materials and goods are produced or acquired only as needed for immediate use.

Lean Business Model

A strategy focusing on creating more value for customers with fewer resources by minimizing waste and optimizing processes.