Bell Brothers Has $3,000,000 in Sales

Multiple Choice

Bell Brothers has $3,000,000 in sales. Fixed costs are estimated to be $100,000 and variable costs are equal to 50% of sales. The company has $1,000,000 in debt outstanding at a before-tax cost of 10%. If Bell Brothers' sales were to increase by 20%, how much of a percentage increase would you expect in the company's net income?

A) 20.83%
B) 19.79%
C) 21.92%
D) 23.08%
E) 18.80%