8-1.Pisa Pizza, a seller of frozen pizza, is considering introducing a healthier version of its pizza thatwill be low in cholesterol and contain no trans fats. The firm expects that sales of the new pizza will be$20 million per year. While many of these sales will be to new customers, Pisa Pizza estimates that 40% will come from customers who switch to the new, healthier pizza instead of buying the original version.a.Assume customers will spend the same amount on either version. What level of incremental sales is associated with introducing the new pizza?b.Suppose that 50% of the customers who will switch from Pisa Pizza’s original pizza to its healthier pizza will switch to another brand if Pisa Pizza does not introduce a healthier pizza. What level of incremental sales is associated with introducing the new pizza in this case? 8-6.Cellular Access, Inc. is a cellular telephone service provider that reported net income of $250 million for the most recent fiscal year. The firm had depreciation expenses of $100 million, capital expenditures of $200 million, and no interest expenses. Working capital increased by $10 million. Calculate the free cash flow for Cellular Access for the most recent fiscal year.
You've reached the end of your free preview.
Want to read all 5 pages?