Define expected annual incremental after-tax free cash flows

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Question: 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 1.00 million bottles; a probability of 0.36 that consumers will find the smell acceptable and annual sales will be 170,000 bottles; and a probability of 0.18 that consumers will find the smell unpleasant and annual sales will be only 45,000 bottles. The selling price is $35, and the variable cost is $8 per bottle. Fixed production costs will be $1.00 million per year, and depreciation will be $1.15 million. Assume that the marginal tax rate is 40 percent. What are the expected annual incremental after-tax free cash flows from the new fragrance?

Annual incremental cash flows $

Reference no: EM132043853

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