A Stationery Company Plans to Launch a New Type of Indelible

Multiple Choice

A stationery company plans to launch a new type of indelible ink pen.Advertising for the new product will be heavy and will cost the company $10 million,although the company expects general revenues of $280 million next year from sources other than sales of the new pen.If the company has a corporate tax of 40% on its pretax income,what effect will the advertising for the new pen have on its taxes?

A) increase taxes by $10 million
B) increase taxes by $4 million
C) It will have no effect on taxes.
D) reduce taxes by $4 million
E) reduce taxes by $10 million