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Basic Point plc (the Company) is considering the launch of an advertising campaign for its latest product, the learning thermostat. The Company plans to spend
Basic Point plc ("the Company") is considering the launch of an advertising campaign for its latest product, the learning thermostat. The Company plans to spend euro 5 million on TV, radio, online and print advertising this year for the campaign. The advertising is expected to boost sales of the learning thermostat by euro 9 million this year and by euro 7 million next year. In addition, the Company expects that new consumers who buy the learning thermostat will be more likely to try the Companys other products. As a result, sales of other products are expected to rise by euro 2 million each year. Basic Points gross profit margin for the thermostat is 35%, and its gross profit margin averages 25% for all other products. The Companys marginal corporate tax rate is 35% both this year and next year. What are the incremental earnings associated with the advertising campaign
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