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A brewer is launching a new product; brewed ginger ale with a low alcohol content. The brewer plans to spend $3 million promoting this product
A brewer is launching a new product; brewed ginger ale with a low alcohol content. The brewer plans to spend $3 million promoting this product this year, which is expected to expand its sales of this product to $11 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 35%. What are incremental earnings arising from the promotional campaign this year? O A. $4.40 million B. $1.95 million C. $1.76 million OD. $1.05 million
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