A brewer is launching a new product; brewed ginger ale with a low alcohol content. The brewer plans to spend $4 million promoting this product this year, which is expected to expand its sales of this product to $11 million this year and $8 million next year. They do expect there will be loss of sales of $3 million this year and next year in their other products as customers switch to drinking the new ginger ale. The gross profit margin for the new ginger ale is 40%, the gross profit margin of all of the? brewer's other products is? 30%, and the? brewer's marginal corporate tax rate is 35%. What are incremental earnings arising from the promotional campaign this year?

 

Answer rating: 100% (QA)

To calculate the incremental earnings arising from the promotional campaign this year we need to con... View the full answer