Bell Brothers Has $3,000,000 in Sales

Multiple Choice

Bell Brothers has $3,000,000 in sales. Its fixed costs are estimated to be $100,000, and its variable costs are equal to fifty cents for every dollar of sales. The company has $1,000,000 in debt outstanding at a before-tax cost of 10 percent. If Bell Brothers' sales were to increase by 20 percent, how much of a percentage increase can one expect in the company's net income?

A) 15.66%
B) 18.33%
C) 19.24%
D) 21.50%
E) 23.08%