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.
$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 $7000$

-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

Which One of the Following Statements About Capacity Cushion Is

Multiple Choice

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