Calculate the incremental operating cash flows that is expected from the purchase of the new drill.
January 4, 2018
Calculate the present value of growth opportunities.
January 4, 2018

Demand remains stable

The following table summarizes information about U.S. pancake syrup products:

Assume the following apply to the time period relevant for the question:

• Demand remains stable

• No new firms enter and no new products are introduced

• No changes in advertising are made

• Firms have constant returns to scale and input prices are constant

(a). Given current prices, which brand do you expect to gain share in the next few months?

(b) Which brand can earn the highest profits in the longer run (assuming prices can be changed)?


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