A Small Manufacturer That Makes Clothes-Pegs and Other Household Products

Multiple Choice

A small manufacturer that makes clothes-pegs and other household products buys new injection moulding equipment for a cost of $500,000. This will allow the manufacturer to make more pegs in the same amount of time with an estimated increase in sales of 15%. If the manufacturer currently makes 75 tonnes of pegs per year, which sell at $18,000 per tonne, what will be the increase in revenue next year from the new equipment?

A) $80,500
B) $20,700
C) $857,000
D) $202,500