A brewer is launching a new product; brewed ginger ale with low alcohol content. The brewer plans to spend $4 million promoting this product this year, which is expected to expand its sales of this product to $10 million this year and $8 million next year. They do expect there will be loss of sales of$3 million this year and next year in their other products as customers switch to drinking the new ginger ale. The gross profit margin for the new ginger ale is 40%, the gross profit margin of all of the brewer's other products is 30%, and the brewer's marginal corporate tax-rate is 20%. What are incremental earnings arising from the promotional campaign this year?

A.

$0.36million

B.

$1.30million

C.

$1.44million

D.

$4.00 million

2. Maturity (years) 1 2 3 4 5

Price $97.25 $94.53 $91.83 $89.23 $87.53

The above table shows the price per $100 face value of several risk-free, zero-coupon bonds. What is the yield to maturity of the

two-year,

zero-coupon, risk-free bond shown?

A.

5.71%

B.

0.05%

C.

2.85%

D.

1.43%