The Lincoln Corporation has current annual sales of $700,000 and a net profit margin of 5%. Sales are expected to increase by 6% annually while the profit margin is expected to remain constant. What is the projected after-tax earnings for two years from now?

Question

Quizplus · Accepted Answer

The projected sales two years from now can be calculated as $700,000 * (1 + 6%)^2 = $785,196. The net profit margin remains at 5%, so the projected after-tax earnings would be 5% of $785,196, which equals $39,259.80. Rounding to the nearest whole number gives $39,260, which is not an option, so the closest provided option is D) $39,326.

The Lincoln Corporation Has Current Annual Sales of $700,000 and a Net