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A beauty product company is developing a new fragrance named Happy Forever. There is a probability of 0.48 that consumers will love Happy Forever, and in this case, annual sales will be 1.10 million bottles; a probability of 0.39 that consumers will find the smell acceptable and annual sales will be 193,000 bottles; and a probability of 0.13 that consumers will find the smell unpleasant and annual sales will be only 48,000 bottles. The selling price is $37, and the variable cost is $11 per bottle. Fixed production costs will be $1.02 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
You are trying to decide how much money you will need at retirement. How much will you need at retirement to fund these planned withdrawals?
What is the trade receivables turnover for 2004 and 2003?- What is the inventory turnover for 2004 and 2003?- Comment on the trend.
Management of Franklin Mints, a confectioner, is considering purchasing a new jelly bean-making machine at a cost of $273,491. They project that the cash flows from this investment will be $114,220 for the next seven years. If the appropriate discoun..
Which of the following would be an incentive for a company to increase its target debt ratio? A. Corp tax rate increases. B. The personal tax rate increases. C. The company's operating leverage decreases. D. Inflation rate increases. E. The company's..
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Given the following information, leverage will add how much value to the unlevered firm per dollar of debt? Corporate tax rate: 34%
Louise Manufacturing uses 2,600 switch assemblies per week and then reorders another 2,600. The relevant carrying cost per switch assembly is $10.50, and the fixed order cost is $1,300. What are the current carrying costs? Calculate the economic orde..
Compute the Payback statistic for Project X and recommend whether the firm should accept or reject the project with the cash flows shown below if the appropriate cost of capital is 10 percent and the maximum allowable payback is 5 years.
Consider the following capital market: a risk-free asset yielding 0.75% per year and a mutual fund consisting of 70% stocks and 30% bonds. The expected return on stocks is 10.75% per year and the expected return on bonds is 3.25% per year. The standa..
You are asked to recreate the firm's cash flow statement. The firm had $100,000 in the bank at the end of the prior year and its working capital accounts except cash remain constant during the year. What was the firm's end of the year cash balance? R..
When the net present value is negative, the internal rate of return is __________ the cost of capital.
Financial holding companies are: Companies that hold a variety of different types of financial institutions. Are currently being regulated by the U.S. Office of the Comptroller of the Currency. Cannot hold both depository and non-depository financial..
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