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A beauty product company is developing a new fragrance named happy forever. There is a probability of 0.5 to that consumers will love happy forever,
A beauty product company is developing a new fragrance named happy forever. There is a probability of 0.5 to that consumers will love happy forever, and in this case, annual sales will be 1.07 million bottles a probability of 0.38 that consumers will find the smell acceptable and annual sales will be 170,000 bottles and a probability of 0.10 that consumers will find the smell unpleasant an annual sales will be only 53,000 Bottles. The selling price is $38, and the variable cost is $10 per bottle. Fix production cost will be 1.03 million per year, and depreciation will be $1.15 million per year. Assume that the marginal tax rate is 27%. What are the expected annual incremental after tax free cash flows from the new fragrance?
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