Should the company proceed with development of the product

Reference no: EM13304929

A sports nutrition company is examining whether a new high-performance sports drink should be added to its products line. a preliminary feasibility analysis indicated that the company would need to invest $17.5 million in a new manufacturing facility to produce and package the product. A financial analysis using sales and cost data supplied by marketing and production personnel indicated that the net cash flow (cash flows minus cash outflows) would be $6.1 million in the first year of commercialization, 7.4 million in year 2, $7.0 million in year 3, and $5.5 million in year 4.

a. should the company proceed with development of the product if the discounts rate is 20 percent and does the decision to proceed with the development of the product change if the discount rate is 15 percent and why?

Reference no: EM13304929

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