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An existing soft drink line generates annual cash flow of $10,000,000. The company is considering introducing a new soft drink that is projected to generate
An existing soft drink line generates annual cash flow of $10,000,000. The company is considering introducing a new soft drink that is projected to generate $3,000,000 of annual cash flow; however, if the new drink is launched cash flow from the existing drink is expected to decline by $1,000,000 when consumers switch from the old drink to the new one. How much annual cash flow should be included in the Discounted Cash Flow analysis of the new drink?
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