Question4Chip’s HomeBrew Whiskey management forecasts that if the firm sells each bottle ofSnake-Bite for $20, then the demand for the product will be 15,000 bottles peryear, whereas sales will be 90 percent as high if the price is raised 10percent. Chip’s variable cost per bottle is $10, and the total fixed cash costfor the year is $100,000. Depreciation and amortization charges are $20,000, andthe firm has a 30 percent marginal tax rate. Management anticipates an increasedworking capital need of $3,000 for the year. What will be the effect of theprice increase on the firm’s FCF for the year? (Roundanswers to nearest whole dollar, e.g. 5,275.)At $20 per bottle the Chip’s FCF is and at the new price Chip’s FCF is
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