Sangria Topochico $-$ The Capital Budgeting Decision

In December $2012,$ Mar$$a Guadalupe, the owner of Sidral Mundet Sol, had just finished reading a report

done by his general manager, Francisco Javier, about the possible investment in a new product line,

Sangria Topochico. The idea of Sangria Topochico came about three months earlier when Mar$$a attended

a seminar on youth obesity organized by a local high school that his two children attended. Even though

he had often heard of the rising obesity problem in Mexico, Mar$$a was still very disturbed by the statistics

indicating how the obesity rate in Mexico had tripled since $1980,$ and that $69\mathrm{.}5\%$ of the people $15$ years

and older were either obese or overweight.

Even more shocking to Mar$$a$,$ based on this statistic, Mexico now had the highest overweight rate in the

world, surpassing the United States.

After the seminar, Mar$$a discussed the idea of Sangria Topochico, a low$-$price, zero$-$calorie carbonated

soft drink, with Francisco Javier, Francisco was excited about the idea, and liked the opportunity to

launch something new, especially given that the company had not introduced a new product in the last

five years. However, Francisco thought a market study should be done to gauge the potential demand

before the firm undertook the investment.