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7.(10%) Suppose Pepsi is considering introducing a new ultra-light beer called BudZero. The firm believes that the beer's flavor and appeal to calorie-conscious drinkers will
7.(10%) Suppose Pepsi is considering introducing a new ultra-light beer called BudZero. The firm believes that the beer's flavor and appeal to calorie-conscious drinkers will make it a success. The risk of the project is judged to be similar to the risk of the company. The cost of bringing the beer to market is $500 million, but Pepsi expects first-year incremental free cash flows from BudZero to be $100 million and to grow at 5% per year thereafter. If Pepsi's WACC is 10%, should it go ahead with the project
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