A stationery company plans to launch a new type of indelible ink pen. Advertising for the new product will be heavy and will cost the company $5 million next year, although the company expects to earn pre-tax income of $50 million from operations other than the new pen. If the company has a corporate tax rate of 25% on its pretax income, what effect will the advertising for the new pen have on its taxes? It will have no effect on taxes. It will reduce taxes by $1.25 million. It will increase taxes by $5 million. It will increase taxes by $1.25 million. It will increase taxes by $3.75 million. It will reduce taxes by $3.75 million