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QUESTION

Assume we invest $160,000 in a new project that we anticipate will expand sales by 22% over our current level of sales of $600,000.

Assume we invest $160,000 in a new project that we anticipate will expand sales by 22% over our current level of sales of $600,000. The increase in fixed costs and variable costs are expected to be 40% of sales. We can depreciate the initial outlay of $160,000 over a five-year period. The company's marginal tax rate is 25%. What is the expected change in net income?

   $32,000 

  $79,200 

  $35,400  

 $47,000

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