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ABC is considering the launch of an ad campaign. It plans to spend $5.0 million on TV advertising. The ads are expected to increase
ABC is considering the launch of an ad campaign. It plans to spend $5.0 million on TV advertising. The ads are expected to increase sales by $9 million this year and $7 million next year. The new consumers are also expected to boost sales of other products by $2 million each year. ABC's gross margin is 25% and average corporate tax rate is 35%. ABC needs to invest 10% of sales in NWC. Estimate ABC's FCF in year 1 is and year 2 is Answers must be rounded up to four decimal places.
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