NPV Problem

Cute Name Beverages, Ltd (CNB) is looking into expanding production into Premium Red wine. The grapes will be sourced from local vineyards, so the main capital outlays for the new product will be a new bottling machine and a dozen large oak barrels. After 10 years, CNB expects that tastes will have moved on and production will cease. As consultants, your firm has been engaged by CNB to help analyse the potential new product. Your team has collected the following facts and grouped them into four areas: Revenue, Costs, Bottling Machine and Oak Barrels.

1. Revenue Based on market research, CNB projects annual sales at 3,500 cases per year for 10 years. Each case will be sold for $180. If the new Premium Red is launched, CNB projects that net revenue from their existing Premium Rose line will decrease by $15,000 per year.

What is the annual net revenue for the Premium Red project taking into account all of the relevant facts in the Revenue section