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Miralonge Manufacturing Ltd. has a net profit of $5.7 million on sales for the year of $49.4 million. The cost of goods sold is 45%

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Miralonge Manufacturing Ltd. has a net profit of $5.7 million on sales for the year of $49.4 million. The cost of goods sold is 45% of revenue and fixed costs totaled $29 million. The company's collection period is 25 days and average inventory turnover period is 75 days. Miralonge has added a new product to its line that is expected to increase sales revenue by 10%. The company's cost of capital is 7% and its ratios of cost of goods to sales, average collection period and average inventory turnover period will stay the same. Pixed costs will remain unchanged. What will be the net increase to profit, including the costs associated with expanding working capital, from the addition to the product line? (6 marks) Miralonge Manufacturing Ltd. has a net profit of $5.7 million on sales for the year of $49.4 million. The cost of goods sold is 45% of revenue and fixed costs totaled $29 million. The company's collection period is 25 days and average inventory turnover period is 75 days. Miralonge has added a new product to its line that is expected to increase sales revenue by 10%. The company's cost of capital is 7% and its ratios of cost of goods to sales, average collection period and average inventory turnover period will stay the same. Pixed costs will remain unchanged. What will be the net increase to profit, including the costs associated with expanding working capital, from the addition to the product line? (6 marks)

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