Question
Vernon-Nelson Chemicals is planning to release a new brand ofinsecticide, Bee-Safe, that will kill many insect pests but not harm useful pollinators. Buying new equipment
Vernon-Nelson Chemicals is planning to release a new brand ofinsecticide, Bee-Safe, that will kill many insect pests but not harm useful pollinators. Buying new equipment to manufacture the product will cost $ 25 million comma
$25million, and there will be an additional $ 2 million
$2million cost to reconfigure existing plant. The equipment is expected to have a lifetime of eight
eight years and will be depreciated by thestraight-line method over its lifetime. The firm expects that they should be able to sell1,500,000 gallons per year at a price of $ 53
$53 per gallon. It will take $ 39
$39 per gallon to manufacture and support the product. IfVernon-Nelson's marginal tax rate is40%, what are the incremental earnings in year 3 of thisproject?
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