Table 6.4 Mr.Lee Is Considering a Capacity Expansion for His Supermarket.The Annual

question 11

Multiple Choice

Table 6.4
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 6.4,if Lee expands the capacity to an equivalent of $360,000 sales now (year 0) ,and then expands the capacity to an equivalent of $400,000 sales at the beginning of year 4,how much would pretax cash flow increase in total for all years (years 1 through 5) ?

• A)less than $30,000
• B)more than $30,000 but less than $40,000
• C)more than $40,000 but less than $50,000
• D)more than $50,000

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