Innovative Inc.is experiencing a boom for the products it has introduced recently.The estimated annual sales projected for the next five years are given below.The current capacity is equivalent to only $100 million sales.The company is considering the alternative of expanding capacity to an equivalent of $250 million sales.Assume a 25 percent pretax profit margin.What is the increase in total pretax cash flow (summed over all years)that would be enjoyed because of the expansion?
A)less than or equal to 40 million
B)more than 40 million but less than or equal to 70 million
C)more than 70 million but less than or equal to 100 million
D)more than 100 million

Question

Innovative Inc.is experiencing a boom for the products it has introduced recently.The estimated annual sales projected for the next five years are given below.The current capacity is equivalent to only $100 million sales.The company is considering the alternative of expanding capacity to an equivalent of $250 million sales.Assume a 25 percent pretax profit margin.What is the increase in total pretax cash flow (summed over all years)that would be enjoyed because of the expansion? 
A)less than or equal to 40 million 
B)more than 40 million but less than or equal to 70 million 
C)more than 70 million but less than or equal to 100 million 
D)more than 100 million

Quizplus · Accepted Answer

The Answer of Innovative Inc.is experiencing a boom for the products it has introduced recently.The estimated annual sales projected for the next five years are given below.The current capacity is equivalent to only $100 million sales.The company is considering the alternative of expanding capacity to an equivalent of $250 million sales.Assume a 25 percent pretax profit margin.What is the increase in total pretax cash flow (summed over all years)that would be enjoyed because of the expansion? 
A)less than or equal to 40 million 
B)more than 40 million but less than or equal to 70 million 
C)more than 70 million but less than or equal to 100 million 
D)more than 100 million