Sleep Tight Motel has the opportunity to purchase an adjacent plot of land. Building on this land would increase their capacity from the current sales level of $515,000/year to $600,000/year. Sleep Tight experiences a 20 percent before- tax profit margin. It wishes to estimate the additional before- tax profits that the expansion will produce. Using the following information, how much more before- tax cash flow would be realized just in the year 10 alone?
A) less than or equal to $20,000
B) greater than $20,000 but less than or equal to $25,000
C) greater than $25,000 but less than or equal to $30,000
D) greater than 30,000
Correct Answer:
Verified
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