Effect of the price increase on firm fcf

Reference no: EM13751409

Chip's Home Brew Whiskey management forecasts that if the firm sells each bottle of Snake-Bite for $20, then the demand for the product will be 15,000 bottles per year, whereas sales will be 90 percent as high if the price is raised 10 percent. Chip's variable cost per bottle is $10, and the total fixed cash cost for the year is $100,000. Depreciation and amortization charges are $20,000, and the firm has a 30 percent marginal tax rate. Management anticipates an increased working capital need of $3,000 for the year. What will be the effect of the price increase on the firm's FCF for the year?

Reference no: EM13751409

Questions Cloud

Write paper on rational thought and technologicaladvancement : Write a paper on Rational thought and technological advancement.

Analyze the organizational performance and effectiveness : ou are to research and analyze the organizational performance and effectiveness of one of the organizations listed below. You will also propose recommendations for change and improvement.

Capital structure for qm industries : The target capital structure for QM Industries is 35% common stock, 6% preferred stock, and 59% debt. If the cost of common equity for the firm is 17.2%, the cost of preferred stock is 9.8%, the before-tax cost of debt is 7.8%, and the firm's tax ..

Unemployment data by labor force groups and duration : Find unemployment data for the following four years 1995, 2000, 2005, and the last available year. Use four labor force groups: males, and females, in each case 16 to 19 years of age, versus 20 years of age or over.

Effect of the price increase on firm fcf : Depreciation and amortization charges are $20,000, and the firm has a 30 percent marginal tax rate. Management anticipates an increased working capital need of $3,000 for the year. What will be the effect of the price increase on the firm's FCF fo..

Prepares an annotated bibliography of representative work : Creating an Annotated Bibliography - The graduate prepares an annotated bibliography of representative works on educational theory, trends, and practices.

Research about the firms and the stock market : How are the stocks in your watch list performing since you first selected them? Speculate on reasons for each stock's performance and justify your analysis with research about the firms and the stock market in general.

What was the rate of inflation for the month : What was the rate of inflation for the month? How does that rate of inflation compare with the rate in the previous month?

What was context in which mather understood measles epdimic : What was the context in which Mather understood the measles epdimic? What lesson did he draw from his family's affliction?

User Account

All Pages