Lyman Company Has the Opportunity to Increase Annual Credit Sales

Multiple Choice

Lyman Company has the opportunity to increase annual credit sales $100,000 by selling to a new, riskier group of customers. The expenses of collecting credit sales are expected to be 15 percent of credit sales. The company's manufacturing and selling expenses are projected at 70% of sales, and its effective income tax rate is 40%. If Lyman accepts this sales opportunity, its after-tax profits would increase by an estimated:

A) $9,000.
B) $10,000.
C) $10,200.
D) $14,400.
E) Some amount other than these choices.