Question
CathFoods will release a new range of candies which contain anti-oxidants. New equipment to manufacture the candy will cost $3 million which will be depreciated
CathFoods will release a new range of candies which contain anti-oxidants. New equipment to manufacture the candy will cost $3 million which will be depreciated by straight-line depreciation over 5 years. In addition, there will be $5million spent on promoting the new candy line. It is expected that the range of candies will bring in revenues of $5 million per year for five years with production and support costs of $1.5 million per year. If CathFood's marginal tax rate is 20%, what are the incremental earnings in the second year of this project?
A. $2.320 million
B. $2.900 million
C. $1.000 million
D. $0.580 million
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