A beauty product company is developing a new fragrance named Happy Forever. There is a probability of 0.46 that consumers will love Happy Forever, and in this case, annual sales will be 1.03 million bottles; a probability of 0.36 that consumers will find the smell acceptable and annual sales will be 227,000 bottles; and a probability of 0.18 that consumers will find the smell unpleasant and annual sales will be only 52,000 bottles. The selling price is $37, and the variable cost is $9 per bottle. Fixed production costs will be $1.05 million per year, and depreciation will be $1.17 million. Assume that the marginal tax rate is 27 percent. What are the expected annual incremental after-tax free cash flows from the new fragrance? (Round answer to O decimal places, e.g. 5,275)
A beauty product company is developing a new fragrance named Happy Forever. There is a probability of 0.46 that consumers will love Happy Forever, and in this case, annual sales will be 1.03 million bottles; a probability of 0.36 that consumers will find the smell acceptable and annual sales will be 227,000 bottles; and a probability of 0.18 that consumers will find the smell unpleasant and annual sales will be only 52,000 bottles. The selling price is $37, and the variable cost is $9 per bottle. Fixed production costs will be $1.05 million per year, and depreciation will be $1.17 million. Assume that the marginal tax rate is 27 percent. What are the expected annual incremental after-tax free cash flows from the new fragrance? (Round answer to O decimal places, e.g. 5,275)
Essentials of Business Analytics (MindTap Course List)
2nd Edition
ISBN:9781305627734
Author:Jeffrey D. Camm, James J. Cochran, Michael J. Fry, Jeffrey W. Ohlmann, David R. Anderson
Publisher:Jeffrey D. Camm, James J. Cochran, Michael J. Fry, Jeffrey W. Ohlmann, David R. Anderson
Chapter5: Probability: An Introduction To Modeling Uncertainty
Section: Chapter Questions
Problem 32P: Assume that the traffic to the web site of Smileys People, Inc., which sells customized T-shirts,...
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