Kokomochi is considering the launch of an advertising campaign for its latest dessert product, the Mini Mochi Munch. Kokomochi plans to spend $3.8 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$10.1 million this year and $8.1million 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 $1.8 million each year.

Kokomochi's gross profit margin for the Mini Mochi Munch is32%, and its gross profit margin averages 22% 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?

Year 1 A A Incremental Earnings Forecast Sales of Mini Mochi Munch Other Sales Cost of Goods Sold Gross Profit Selling, General, and Admin. Expenses Depreciation EBIT A A A Income tax at 25% A A Unlevered Net Income