Exercise 5-17

Impact of Income Taxes

Ben Rakusin is contemplating an expansion of his business. He believes he can increase revenues by $9,000 each month if he leases 1,500 additional square feet of showroom space. Rakusin has found the perfect showroom. It leases for $4,000 per month. Ben's tax rate is 30 percent.

Required:

What estimated after-tax income will Rakusin earn from his expansion? $