Incremental earnings from advertising synergies

Bangers, Inc. is a start-up manufacturer of Australian-style frozen veggie pies located in San Antonio, Texas. The company is five years old and recently installed the manufacturing capacity to quadruple its unit sales. To jump start the demand for its products, the company founders have hired a local advertising firm to create a series of ads for its new line of meat pies. The ads will cost the firm $400,000 to run for one year. Bangers’ management hopes that the advertising will produce annual sales of $2.2 million for its meat pies. Moreover, the firm expects that sales of its veggie pies will increase by $100,000 next year as a result of the company name recognition derived from the meat pie ad campaign. If Bangers operating profits per dollar of new sales revenue are 45 percent and the firm faces a 31 percent tax bracket, what is the incremental operating profit the firm can expect to earn from the ad campaign? Does the decision to place the ad look good from the perspective of the anticipated profits?


1. The incremental operation profit the firm can expect to earn from the as campaign for year 1 is $___________


2.The incremental operation profit the firm can expect to earn from the as campaign for year 2 is $___________



3.The decision to place the ad appears to be an (unacceptable/acceptable) project since the year 1 and year 2 cash flows are significantly (Greater/less) than the $400,000 initial outlay for taking the project.

Calculate your order
Pages (275 words)
Standard price: $0.00
Client Reviews
Our Guarantees
100% Confidentiality
Information about customers is confidential and never disclosed to third parties.
Original Writing
We complete all papers from scratch. You can get a plagiarism report.
Timely Delivery
No missed deadlines – 97% of assignments are completed in time.
Money Back
If you're confident that a writer didn't follow your order details, ask for a refund.

Calculate the price of your order

You will get a personal manager and a discount.
We'll send you the first draft for approval by at
Total price:
Power up Your Academic Success with the
Team of Professionals. We’ve Got Your Back.
Power up Your Study Success with Experts We’ve Got Your Back.