Kokomochi is considering the launch of an advertising campaign for its latest dessert product, the Mini Mochi Munch. Kokomochi plans to spend $5.3 million on TV, radio, and print advertising this year for the campaign. The ads are expected to boost sales of the Mini Mochi Munch by $8.6 million this year and $6.6 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 $1.7 million each year. Kokomochi's gross profit margin for the Mini Mochi Munch is 31%, and its gross profit margin averages 24% for all other products. The company's marginal corporate tax rate is 21% both this year and next year. What are the incremental earnings associated with the advertising campaign? (Please write out all of the zeros. No integers or  abbreviations. Round to the nearest dollar.)
Kokomochi is considering the launch of an advertising campaign for its latest dessert product, the Mini Mochi Munch. Kokomochi plans to spend $5.3 million on TV, radio, and print advertising this year for the campaign. The ads are expected to boost sales of the Mini Mochi Munch by $8.6 million this year and $6.6 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 $1.7 million each year. Kokomochi's gross profit margin for the Mini Mochi Munch is 31%, and its gross profit margin averages 24% for all other products. The company's marginal corporate tax rate is 21% both this year and next year. What are the incremental earnings associated with the advertising campaign? (Please write out all of the zeros. No integers or  abbreviations. Round to the nearest dollar.)
Chapter11: Cash Flow Estimation And Risk Analysis
Section: Chapter Questions
Problem 1mM
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Kokomochi is considering the launch of an advertising campaign for its latest dessert product, the Mini Mochi Munch. Kokomochi plans to spend $5.3 million on TV, radio, and print advertising this year for the campaign. The ads are expected to boost sales of the Mini Mochi Munch by $8.6 million this year and $6.6 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 $1.7 million each year.
Kokomochi's gross profit margin for the Mini Mochi Munch is 31%, and its gross profit margin averages 24% for all other products. The company's marginal corporate tax rate is 21% both this year and next year. What are the incremental earnings associated with the advertising campaign?
(Please write out all of the zeros. No integers or  abbreviations. Round to the nearest dollar.)
Transcribed Image Text:Kokomochi is considering the launch of an advertising campaign for its latest dessert product, the Mini Mochi Munch. Kokomochi plans to spend $5.3 million on TV,
radio, and print advertising this year for the campaign. The ads are expected to boost sales of the Mini Mochi Munch by $8.6 million this year and $6.6 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 $1.7 million each year.
Kokomochi's gross profit margin for the Mini Mochi Munch is 31%, and its gross profit margin averages 24% for all other products. The company's marginal
corporate tax rate is 21% both this year and next year. What are the incremental earnings associated with the advertising campaign?
bas
Complete the table below: (Round to the nearest dollar.)
Incremental Earnings Forecast
Year 1
Year 2
Sales of Mini Mochi Munch
24
2$
Other Sales
Cost of Goods Sold
Gross Profit
2$
2$
Selling, General, and Admin. Expenses
Depreciation
EBIT
24
Income tax at 21%
Unlevered Net
%24
$4
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