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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 $6.1 million on

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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 $6.1 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 $8.3 million this year and $6.3 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 36%, and its gross profit margin averages 25% 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? Incremental Earnings Forecast Year 1 Sales of Mini Mochi Munch $ Other Sales Cost of Goods Sold Gross Profit $ Selling, General, and Admin. Expenses Depreciation 0 EBIT $ FA Income tax at 25% Unlevered Net Income

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