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(incremental earnings from advertising synergles) Bangers, inc is a start-up manufacturer of Australian-stylo frozen vegge pios located in San Antono, Texas. The company is five

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(incremental earnings from advertising synergles) Bangers, inc is a start-up manufacturer of Australian-stylo frozen vegge pios located in San Antono, Texas. The company is five years old and recenty inataled the manufacturing capacity to quadruple its unit sales. To jump start the demand tor its products, the company founders have hired a local advertising firm to create a series of ads lor its new line of meat pies. The ads will cost the fim $400,000 to fun for one year. Bangers' management hopes that the advertising will produce annual sales of 52 millon for its meat pies. Moreover, the firmis managoment expects that sales of its vegge pies will increase by $200,000 next year as a result of the compary name recognition derived from the meat pie ad campaign. If Bargers' operating profts por dollar of new sales revenue are 40 percent and the frm foces a 30 percent tax bracket, what is the incremertal operating prott the frm can expect to earn from the ad campaign? Does the decision to place the ad look good from the perspoctive of the anbopoted profts? The incremental operating profit the firm can expect to eam trom the ad campaign for year 1 is 5 (Round to the nearest dellar) The incremental operasing proft the firm can expect to eam from the ad campaign for year 2 is 5 (Round to the nearest doliar) The decivon to place the ad appears to be an project since the year 1 and year 2 cash fows are significantly than the $400,000 intial outlay for labing the project. (Select from the drog-down menus)

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