Q.) Jones Lumber had an exclusive three-year supply agreement with Wood Construction. The contract called for lumber sales of $4,000,000 per year. After one year, Wood Construction canceled the contract without cause. The court found Wood Construction liable under the contract. Jones Lumber had average gross margins of 40 percent and average net income of 10 percent of sales. Jones Lumber's operating expenses average 70 percent fixed. The damages from the loss of this contract would be:

a) $1,240,000

b) $2,480,000

c) $400,000

d) $4,000,000

e) None of the above is correct