Table $5.4$ Mr Lee Is Considering a Capacity Expansion for His Supermarket

Multiple Choice

Table $5.4$
Mr. Lee is considering a capacity expansion for his supermarket. The annual sales projected for the next five years follow. The current capacity is equivalent to $\$ 300,000$ sales. Assume a 20 percent pretax profit margin.


-Using the information in Table 5.4, if Lee expands the capacity to an equivalent of $360,000 sales now (year 0) , how much would pretax cash flow in year 1 increase because of this expansion?

A) less than $3000
B) more than $3000 but less than $5000
C) more than $5000 but less than $7000
D) more than $7000