Bell Brothers has $3,000,000 in sales. Fixed costs are estimated to be $100,000

Question

Bell Brothers has $3,000,000 in sales. Fixed costs are estimated to be $100,000 and variable costs are equal to 50% of sales. The company has $1,000,000 in debt outstanding at a before-tax cost of 10%. If Bell Brothers' sales were to increase by 20%, how much of a percentage increase would you expect in the company's net income? a. 19.79% b. 18.80% c. 21.92% d. 23.08% e. 20.83% Bell Brothers has $3,000,000 in sales. Fixed costs are estimated to be $100,000 and variable costs are equal to 50% of sales. The company has $1,000,000 in debt outstanding at a before-tax cost of 10%. If Bell Brothers' sales were to increase by 20%, how much of a percentage increase would you expect in the company's net income? a. 19.79% b. 18.80% c. 21.92% d. 23.08% e. 20.83%

Explanation / Answer

d. 23.08%

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