A Brewer Is Launching a New Product-Brewed Ginger Beer with Low

question 80

Multiple Choice

A brewer is launching a new product-brewed ginger beer with low alcohol content. The brewer plans to spend $4 million promoting this product this year, which is expected to expand its sales of this product to $10 million this year and $8 million next year. They do expect there will be loss of sales of $1 million this year and next year in their other products as customers switch to drinking the new ginger beer. The gross profit margin for the new ginger beer is 40%, the gross profit margin of all of the brewer's other products is 30%, and the brewer's marginal corporate tax rate is 30%. What are incremental earnings arising from the promotional campaign this year?

• A)$4.68 million
• B)$3.29 million
• C)$5.28 million
• D)$2.10 million

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Definitions:

Population Variances

A measure of the variability or spread of a population's data points, representing the average of the squared deviations from the mean.

Two-tail Test

A statistical test used to determine whether there is a significant difference between a sample and a population mean in either direction.

Sample Variances

A measure of the spread or dispersion of a set of sample data points.

Test Statistic

A value calculated from sample data during a hypothesis test used to determine whether to reject the null hypothesis.