Bullehas been supplying a range of carbonated beverages for a very long time. TheBulleowns some of the most recognizable and strongest global brands. Its brands are almost synonymous with 'life, fun and carbonated drinks'. Historically,Bullehas been a very profitable business.

Bullecurrently uses a common capital investment evaluation process for all investment projects in excess of $5 million. A summary of key criteria includes:

Projects must generate a positive net present value (NPV) over the life of the

Valentina Bubbleis one of Bulle's senior executives. Valentina's team is proposing a major investment in the orange juice

industry.Valentinahas blueprints for an orange juice factory and bottling facility in the township of Mundubbera, Queensland, where there is an ample supply of oranges. The region has experienced relatively high levels of unemployment in recent years and the new plant will generate more than 500 new jobs.

In recent years, amid growing concerns about the negative impact of sugar in general and carbonated drinks in particular, people in some markets have been drinking less carbonated drinks andBulle'ssales volumes in these markets have been falling gradually and consistently for more than a decade.

Valentina and her management team are hoping that their proposed investment is the first of many, marking a shift away from Bulle's heavy reliance on carbonated drinks toward a more diversified product portfolio. The juice industry is highly competitive and there are significant barriers to entry. However, the project will enable link theBullebrand with healthier, natural beverages and will develop a positive reputation with fruit suppliers. This project will representBulledebut in the fruit juice industry and pave the way for many similar investments in the long-term.

The project requires significant capital expenditure andValentinais frustrated by the company's investment decision making processes. She believes the current NPV criterion makes it difficult to pursue strategic investments like the orange juice project; particularly when competing with other projects for limited funds.Valentinabelieves the investment is a good strategic move. It is in-line with the company's growth strategy and opens up opportunities for future expansion. A summary of the project's details is provided in Table 1.

Table 1: Proposed Orange Juice Investment Life 8 years Cost $6.2 million NPV ($210,000) Average ROI over 5 years 15% ROI in year 1 3% pa Average ROI over first three years 10% Payback period 5 years and 6 months