Question: Boston Beer Co (Ticker SAM) is considering introducing a new ultra-light craft beer with zero calories called SamZero. Boston Beer believes that SamZero's appeal to
Boston Beer Co (Ticker SAM) is considering introducing a new ultra-light craft beer with zero calories called SamZero. Boston Beer believes that SamZero's appeal to the young health-conscious drinkers will make it a success. The CFO of Boston Beer, Mr. Frank Smalla, estimates that the cost of bringing such a beer to the market will be $200 million, however, he expects the first-year incremental free cash flows from SamZoro to be $100 million and to grow at 3% per year thereafter. I Boston Beer's WACC is 5.7%, should it go ahead with the project? O A Not enough information has been provided in the question stem to answer this question B. Yes, it should because the NPV of such a project is $3.5 billion O G. No, it should not because the NPV of such a project is -$2.5 billion OD. Yes, it should because the NPV of such a project is $2 billion O E. No, it should not because the NPV of such a project is -$2 billion
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