Question: Problem 4: Estimating FCF (5 points) ABC is considering the launch of an ad campaign. It plans to spend $5.0 million on TV advertising. The

Problem 4: Estimating FCF (5 points) ABC is considering the launch

Problem 4: Estimating FCF (5 points) ABC is considering the launch of an ad campaign. It plans to spend $5.0 million on TV advertising. The ads are expected to increase sales by $9 million this year and $7 million next year. The new consumers are also expected to boost sales of other products by $2 million each year. ABC's gross margin is 25% and average corporate tax rate is 35%. ABC needs to invest 10% of sales in NWC. Estimate ABC's FCF in year 1 and year 2

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