Expected annual incremental after-tax free cash flows

Assignment Help Financial Management

Reference no: EM131609605

A beauty product company is developing a new fragrance named Happy Forever. There is a probability of 0.52 that consumers will love Happy Forever, and in this case, annual sales will be 1.04 million bottles; a probability of 0.39 that consumers will find the smell acceptable and annual sales will be 173,000 bottles; and a probability of 0.09 that consumers will find the smell unpleasant and annual sales will be only 47,000 bottles. The selling price is $35, and the variable cost is $9 per bottle. Fixed production costs will be $1.09 million per year, and depreciation will be $1.17 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: EM131609605

Questions Cloud

Payback period for the RFID-based luggage tracking system : Calculate the payback period for the RFID-based luggage tracking system, assuming that Delta handles 400,000 checked bags per year.

What is this firm cost of equity : The Shoe Outlet has paid annual dividends of $.65, $.70, $.72, and $.75 per share over the last four years, What is this firm's cost of equity?

Calculate the npv of investment : The marginal tax rate is 35 percent, and the appropriate discount rate is 9 percent. Calculate the NPV of this investment.

The company should or should not buy the machine : Rocky Mountain Lumber, Inc., is considering purchasing a new wood saw that costs $55,000. The company should or should not buy the machine?

Expected annual incremental after-tax free cash flows : What are the expected annual incremental after-tax free cash flows from the new fragrance?

Compute the required return for each company : Compute the required return for each company using both CAPM and the constant-growth model.

What is estimated cost of goods sold and gross margin : What is estimated cost of goods sold and gross margin for July, What is the estimated finished goods inventory balance at the end of July,

Determine the real rate of return : Determine the real rate of return that the Whitney family received if the inflation rate is 3.5%.

Semi-annual coupon bond with ten years term to maturity : The firm issued a 13% semi-annual coupon bond with 10 years term to maturity. The current trading price is $1,206.

User Account

All Pages