A Brewery Is Considering Adding a New Line of Craft

question 20

Multiple Choice

A brewery is considering adding a new line of craft beers to its product mix.The new beer will require additional brewing and bottling capacity at a cost of $15 million,but is expected to generate new sales of $5 million per year for the next 5 years.If the brewery has a cost of capital of 6%,what is the NPV of this investment?

• A)$6.1 million
• B)$10 million
• C)-$15 million
• D)$8.6 million
• E)$3.7 million

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Definitions:

Arbitrator's Decision

A final decision made by an arbitrator, who is a neutral third party, to resolve a dispute outside of court.

National Labor Relations Act

A foundational statute of US labor law which guarantees the rights of private sector employees to organize into trade unions, engage in collective bargaining, and take collective action such as strikes.

Strikes

Work stoppages initiated by employees to protest against poor working conditions, low pay, or other labor issues.

Federal Mediation

A dispute resolution process involving a neutral third party, often offered by the government, to assist in reaching a voluntary, negotiated resolution between parties in conflict.