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Emily's Coffee Shop is introducing a weekend offer reducing the price of cappuccino from $4.00 to $3.00. Advertising costs $500. Emily expects cappuccino sales to
Emily's Coffee Shop is introducing a weekend offer reducing the price of cappuccino from $4.00 to $3.00. Advertising costs $500. Emily expects cappuccino sales to increase by 50%, but expects a 20% drop in sales of lattes. The current weekly data are:
- Cappuccino: Sales Price: $4.00, Variable Costs: $2.00, Sales Volume: 800
- Lattes: Sales Price: $3.50, Variable Costs: $1.75, Sales Volume: 700
Requirement: Calculate the financial outcome and advise on the promotion.
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