7. Crete Beverages, which requires an 8% rate of return on its investments, is considering changing the flavor of its most popular drink to one that its taste testers have determined tastes better. The reformulated drink would cost the same to produce as the current drink, but Crete would incur costs to redesign its labels to read “New! Better Flavor!” and retool its machinery for the label change. In addition, Crete would incur costs to advertise the new flavor. There is a good chance that customers will like the new taste enough that income will increase by $2,000,000 per year for the next 5 years, but there is also a chance that customers will be so upset that the drink has changed that income will decrease by $5,000,000 per year for the next 5 years. After a year of sales, Crete could decide to go back to the original drink flavor, at which point income will be the same as it was before the change.

Determine the present value of cash flows if customers like the new taste and Crete continues the flavor, if customers like the new taste and Crete discontinues the flavor, if customers dislike the new taste and Crete continues the flavor, and if customers dislike the new taste and Crete discontinues the flavor.