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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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