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Kokomochi is considering the launch of an advertising campaign for its latest dessert product, the Mini Mochi Munch. Kokomochi plans to spend $3.7 million on

image text in transcribedimage text in transcribed Kokomochi is considering the launch of an advertising campaign for its latest dessert product, the Mini Mochi Munch. Kokomochi plans to spend \$3.7 million on TV, radio, and print advertising this year for the campaign. The ads are expected to boost sales of the Mini Mochi Munch by $9.4 million this year and $7.4 million next year. In addition, the company expects that new consumers who try the Mini Mochi Munch will be more likely to try Kokomochi's other products. As a result, sales of other products are expected to rise by $1.7 million each year. Kokomochi's gross profit margin for the Mini Mochi Munch is 32%, and its gross profit margin averages 23% for all other products. The company's marginal corporate tax rate is 25% both this year and next year. What are the incremental earnings associated with the advertising campaign? \begin{tabular}{|c|c|c|c|} \hline Incremental Earnings Forecast & Year 1 & \multicolumn{2}{|r|}{ Year 2} \\ \hline Sales of Mini Mochi Munch & $[ & $ & \\ \hline Other Sales & & & \\ \hline Cost of Goods Sold & & & \\ \hline Gross Profit & $[ & $ & \\ \hline Selling, General, and Admin. Expenses & & & \\ \hline Depreciation & & & 0 \\ \hline EBIT & $ & $ & \\ \hline Income tax at 25% & & & \\ \hline Unlevered Net Income & $ & $ & \\ \hline \end{tabular}

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