What will be the effect of the price increase on firms fcf

Assignment Help Financial Econometrics
Reference no: EM13327210

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 83 percent as high if the price is raised 9 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: EM13327210

Questions Cloud

Determine the mechanical energy lost due to friction : A sledge loaded with bricks has a total mass of 17.1 kg and is pulled at constant speed by a rope inclined at 19.9° above the horizontal. What is the mechanical energy lost due to friction
Prepare an income statement for 2010 : Prepare an income statement for 2010 and prepare a statement of retained earnings for 2010
How much will jack have to invest today in an account : Jack Robbins is saving for a new car. He needs to have $ 21,000 for the car in three years. How much will he have to invest today in an account paying 8 percent annually to achieve his target
How long was the cannon ball in the air : A cannon is launched at an angle of 45.00 and the cannon ball lands 301 m away. How long was the cannon ball in the air
What will be the effect of the price increase on firms fcf : 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 83 percent as high if the price is raised 9 percent.
Why do people have a demand for money what does the demand : Why do people have a demand for money? What does the demand for money represent and what factors influence the demand for money? Please explain.
What is the npv if the discount rate is 12 percent : Recently, it developed a new process for producing spices. The process requires new machinery that would cost $2,196,790. have a life of five years, and would produce the cash flows shown in the following table.
What is the better gauge of our true cost of borrowing : When borrowing money, what is the better gauge of our true cost of borrowing - the nominal rate of interest or the real rate of interest? Please explain.
What is expansionary monetary policy : What is expansionary monetary policy? Why does expansionary monetary policy have an expansionary effect on the economy (that is, why does it cause aggregate demand to increase)? Please explain.

Reviews

Write a Review

Financial Econometrics Questions & Answers

  Questions on financial econometrics

Objective and multiple choice questions on Financial Econometrics responsible for creating financial statements.

  Prepare entries for the purchase and two subsequent payments

The remainder was paid within the 30-day term. At the end of the annual accounting period, December 31, 2010, 90% of the merchandise had been sold and 10% remained in inventory. The company uses a periodic system.

  Organizational plan and business philosophy

Business decision, organizational plan, business philosophy, policy decision, or concept related to the class.

  Describe is tiaa-cref an ordinary shareholder

Investors generally can make one vote for each share of stock they hold. TIAA-CREF is the largest institutional shareholder in the United States; therefore it holds many shares and has more votes than any other organization.

  What is the effective annual rate-ear on the loan

You have a car loan with a nominal rate of 7.29 percent. With interest charged monthly, what is the effective annual rate (EAR) on the loan

  What is present value of all sandys expected future expenses

Sandy is planing his retirement.The rate of interest that he can lend and borrow at the bank is 6 percent. He currently has $ 125000 in the bank. He intends to buy a car 3 years from now.

  Calculate the npv-irr and non-discounted payback period

Calculate the NPV, IRR, and Non-Discounted Payback Period using Excel - Outline and write the essay starting with the evidence-supported defense of your points and slowly transition into an address of opposing points.

  Describe what happened to the price of the bond

Suppose you purchased one of these bonds at par value when it was issued. Right away, market interest rates jumped, and the YTM on your bond rose to 6%. What happened to the price of your bond

  What is the implied nominal interest rate on a treasury bond

what is the implied nominal interest rate on a treasury bond $100,000 futures contract that settled at 100-160. If interest rates increased by 1%, what would be the contract's new value.

  What is a stock split

What is a cash, special, or stock dividend, what is a stock split and why is a liquidating dividend noteworthy?

  Determine what rate was rbmcc paying to borrow money

Rust Bucket Motor Credit Corporation (RBMCC), a subsidiary of Rust Bucket Motor, offered some securities for sale to the public on March 28, 2008. Under the terms of the deal, RBMCC promised to repay the owner

  Calculate the wacc for both investment

Outline and write the essay starting with the evidence-supported defense of your points and slowly transition into an address of opposing points - Calculate the WACC for both investment. Calculate the NPV for investments discounted at their respec..

Free Assignment Quote

Assured A++ Grade

Get guaranteed satisfaction & time on delivery in every assignment order you paid with us! We ensure premium quality solution document along with free turntin report!

All rights reserved! Copyrights ©2019-2020 ExpertsMind IT Educational Pvt Ltd