What can be the effect of the price increase

Reference no: EM132466

Question:

Chip's Home Brew Whiskey management forecasts that if the firm sells every bottle of Snake-Bite for $20, then the demand for the product will be 15,000 bottles per year, whereas sales will be 93 % as high if the price is raised 10 percent. Chip's variable cost per bottle is $10, and the net fixed cash cost for the year is $100,000. Amortization and Depreciation charges are $20,000, and the firm has a 30 % marginal tax rate. Management anticipates an increased working capital need of $3,000 for the year. What can be the effect of the price increase on the firm's FCF for the year?

At $20 per bottle the Chip's FCF is $ __________ and at the new price Chip's FCF is $_________.

Reference no: EM132466

Questions Cloud

While running snort ids why may there be no alerts : While running Snort IDS why may there be no alerts

What is capitals after-tax wacc : what is Capital's after-tax WACC and what balance could appear in the investment in Holister account as of December 31, 2009?

Write a function called is_anagram : Write a function called is_anagram.

The two classes of glare that employees may encounter : a) Describe briefly the two classes of glare that employees may encounter in their work environment due to poor quality of lighting b) The Fan Laws define the relation of volume flow, pressure and power against the fan speed. How does the volum..

What can be the effect of the price increase : What can be the effect of the price increase on the firm's FCF for the year?

Which loop arrangement be best for accessing an array : Which loop arrangement be best for accessing an array.

Suggest when could bell mountain buy new accounting system : Suggest when could Bell Mountain buy the new accounting system?

Write down a little man computer program : Write down a Little Man Computer program.

What are the main hazards associated with cranes : What are the main hazards associated with cranes, Outline the main legal provisions as per OSHA 2005 concerning the use of cranes, Describe the main consideration for the safe operation of Maintenance Elevated Working Platforms (MEWP).

User Account

All Pages