CathFoods will release a new range of candies which contain antioxidants. New equipment to manufacture the candy will cost $2 million. The new equipment falls under asset class 43 and has a capital cost allowance (CCA) rate of 30%. It is expected that the range of candies will bring in revenues of $4 million per year for five years with production and support costs of $1.5 million per year. If CathFoods' marginal tax rate is 35%, what are the incremental free cash flows in the first year of this project? $0.27 million $1.43 million $1.46 million $2.50 million $4.0 million 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 $10 million, although the company expects general revenues of $280 million next year from sources other than sales of the new pen. If the company has a corporate tax of 40% on its pretax income, what effect will the advertising for the new pen have on its taxes? increase taxes by $10 million increase taxes by $4 million It will have no effect on taxes. reduce taxes by $4 million reduce taxes by $10 million