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Chip s Home Brew Whiskey management forecasts that if the firm sells each bottle of Snake - Bite for $ 2 0 , then the
Chips Home Brew Whiskey management forecasts that if the firm sells each bottle of SnakeBite for $ then the demand for the product will be bottles per year, whereas sales will be percent as high if the price is raised percent. Chips variable cost per bottle is $ and the total fixed cash cost for the year is $ Depreciation and amortization charges are $ and the firm has a percent marginal tax rate.
Management anticipates an increased working capital need of $ for the year. What will be the effect of a price increase on the firms FCF for the year?
Hint: Compute FCF under each alternative and compare the results.
Original Sales Price: $
Price Adjustment:
Adjusted Sales Price: $
Original Product Demand:
Demand Adjustment:
Adjusted Product Demand:
Variable Cost per Bottle: $
Fixed Cash Cost: $
Depreciation & Amortization: $
Tax Rate:
Change in Working Capital: $
Current With Price Hike
Revenue:
Variable Cost:
Fixed Cost:
Depreciation & Amortization:
EBIT:
Tax:
NOPAT:
Depreciation & Amortization:
Working Capital:
Free Cash Flow:
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