Question

Suppose that Coca-Cola decides introduce a new diet soft drink in the market. The product is expected to sell well but it will lkely reduce the sales of some of their other products. Analysts expect that the other diet drinks that Coke sells wil lose $20.00 million in sales per year. The ater-tax operating maran on sales for Coke is 29.00% what 6 the yearty side effect for inoducing the new product? (Expess as posiäive number and answer in terms of MILLIONS,so 1,000,000 would be 1.00 You are the owner of a smal bat The World, and you are considering opening a You estimate that it will oost you $53,701,00 s0 set up the bakery and that you will generate $104 the He of the store (which is expected to be 10 years The one concen you have is shat you have limited parking: by opening the bakery you run the risk ol not having enouph parking for customers who anjoy your bar You estimate that she lost sales amount to $3.257 00 per year and that your aher-tax operating magn on sales the bar is 52.00% lf your discount rate , 1 what is the NPV of opening the bakery bakery in a vacant area in the back of the store. $10.488.00 in after-tax cash flows in for 4.00. Answer Format Currency: Round to: 2 decimal places Enter Answer fHere rch

Answer 1

Question 1:

The expected loss in sales of other Coke products = 20 Million

Since the operating margin is 29% (0.29), yearly side affect is = 20 Million *0.29 = 5.8 Million

Yearly side affect = 5.8 Million

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