Table 44
Mr -Using the Information in Table 4

question 4

Multiple Choice

Table 4.4
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.
$$\begin{array} { | c | c | } \hline \text { Year } & \begin{array} { c } \text { Annual Sales } \\( \$ 000 ) \end{array} \\\hline 1 & 310 \\2 & 320 \\3 & 340 \\4 & 370 \\5 & 400 \\\hline\end{array}$$
-Using the information in Table 4.4,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

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Definitions:

Worker

An individual employed to perform tasks or services, usually in exchange for compensation.

Lowest Terms

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The result of multiplying two or more numbers together or items produced for consumer use.

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