Sleep Tight Motel has the opportunity to purchase an adjacent plot of land. Building on this land would increase their capacity from the current sales level of $515,000/year to $600,000/year
Sleep Tight experiences a 20 percent before-tax profit margin. It wishes to estimate the additional before-tax profits that the expansion will produce. Using the following information, how much more before-tax cash flow would be realized just in year 10 alone?
Year Capacity Requirement (Annual Sales)
1 $515,000
2 $517,000
3 $520,000
4 $525,000
5 $540,000
6 $560,000
7 $565,000
8 $575,000
9 $600,000
10 $620,000
A) less than or equal to $20,000
B) greater than $20,000 but less than or equal to $25,000
C) greater than $25,000 but less than or equal to $30,000
D) greater than 30,000
A
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