Vernon-Nelson Chemicals is planning to release a new brand of insecticide, Bee-Safe, that will kill...
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Vernon-Nelson Chemicals is planning to release a new brand of insecticide, Bee-Safe, that will kill many insect pests but not harm useful pollinators. Buying new equipment to manufacture the product will cost $15 million and there will be an additional $2 million cost to reconfigure existing plant. The equipment is expected to have a lifetime of nine years and will be depreciated by the straight-line method over its lifetime. The firm expects that they should be able to sell 1,600,000 gallons per year at a price of $53 per gallon. It will take $36 per gallon to manufacture and support the product. If Vernon-Nelson's marginal tax rate is 25%, what are the incremental earnings after tax in year 3 of this project? OA) $25.53 million B) $16.60 million C) $19.15 million D) $14.30 million E) $20.30 million
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