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A brewer is launching a new product, brewed ginger ate with a low alcohol content. The brewer plans to spend 54 million promoting this product
A brewer is launching a new product, brewed ginger ate with a low alcohol content. The brewer plans to spend 54 million promoting this product this year, which is expected to expand its sales of this product to $11 milion this year and $8 million next year. They do expect there will be loss of sales of $1 million this year and next year in their other products as customers switch to drinking the new ginger alo. 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? O A $2.00 million B. $2.25 million OC. $4.40 million OD. $0.50 million
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