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

---

Definitions:

Organic Chemistry

The branch of chemistry that studies the structure, properties, and reactions of organic compounds, which contain carbon.

Reaction

A process in which one or more substances are changed into others by the reorganization of their atoms.

HCl

Hydrogen chloride, a diatomic molecule consisting of a hydrogen and a chlorine atom, known for its role as a strong acid when dissolved in water.

Alcohols

Organic compounds characterized by one or more hydroxyl (-OH) groups attached to a saturated carbon atom.