Consider a chocolate maker that will need 10,000 tons of cocoa beans next year. The current market

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Consider a chocolate maker that will need 10,000 tons of cocoa beans next year. The current market price of cocoa beans is \($2900\) per ton. At this price, the firm expects earnings before interest and taxes of \($44\) million next year. What will the firm’s EBIT be if the price of cocoa beans rises to \($3500\) per ton? What will EBIT be if the price of cocoa beans falls to \($2600\) per ton? What will EBIT be in each scenario if the firm enters into a supply contract for cocoa beans for a fixed price of \($2950\) per ton?

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Fundamentals Of Corporate Finance

ISBN: 9780137852581

6th Edition

Authors: Jonathan Berk, Peter DeMarzo, Jarrad Harford

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