year 1 and 2

Homework: Ch 6B, Making Investment Decisions with the NPV F Savo Score: 0.28 of 5 pts 2 of 5 (3 complete) HW Score: 25.21%, 3.28 of 13 pts P8-2 (similar to) E Question Help Kokomochi is considering the launch of an advertising campaign for its latest dessert product, the Mini Mochi Munch. Kokomochi plans to spend $3.29 million on TV, Cla radio, and print advertising this year for the campaign. The ads are expected to boost sales of the Mini Mochi Munch by $9.71 milion this year and $7.71 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 $2.86 million each year. Kokomochi's gross profit margin for the Mini Mochi Munch is 33%, and its gross profit margin averages 25% for all other products. The company's marginal corporate Here tax rate is 30% both this year and next year. What are the incremental earnings associated with the advertising campaign? are Note: Assume that the company has adequate positive Income to take advantage of the tax benefits provided by any net losses associated with this campaign. 50 Calculate the incremental earnings for year 1 below: (Round to three decimal places.) ations 3. M 5/857 Year 1 Incremental Earnings Forecast ($ million) es app W for Sales of Mini Mochi Munch $ 10.680 ve the Other Sales $ 2.490 21. M Cost of Goods Sold $18.728 ment Gross Profit $ 4,442 Selling, General, and Administrative $ -4.470 Estate Depreciation $ 0.000 EBIT $ -0.028 Income Tax at 30% $ 0.009 stions: Incremental Earnings $ -0.018 mess re ers ar amples ce roun Enter any number in the edit fields and then click Check Answer. ? 1 Dart remaining Clear All Check Answer 15 D A