Kokomochi is considering the launch of an advertising campaign for its latest dessert product, the Mini Mochi Munch. Kokomochi plans to spend $5.17 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 $8.62 million this year and $6.62 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 $2.94 million each year.Kokomochi's gross profit margin for the Mini Mochi Munch is 35%, and its gross profit margin averages 24% for all other products. The company's marginal corporate tax rate is 45% both this year and next year. What are the incremental earnings associated with the advertising campaign?

Note: Assume that the company has adequate positive income to take advantage of the tax benefits provided by any net losses associated with this campaign.

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Part 1

Calculate the incremental earnings for year 1 below:(Round to three decimal places.)

		Year 1
Incremental Earnings Forecast ($ million)
Sales of Mini Mochi Munch	$
Other Sales	$
Cost of Goods Sold	$
Gross Profit	$
Selling, General, and Administrative	$
Depreciation	$
EBIT	$
Income Tax at 45%	$
Incremental Earnings	$