Sherrill Winery sells two vintages of wine. The Albertson wine sells for $30 a bottle and annually they sell 13,000 bottles. The Bumphrey wine sells for $90 a bottle, but they only sell 3,000 bottles per year.

The company is considering offering a new, mid-priced wine called Calvinhall. They think they can sell this wine at $60 a bottle, and anticipate they can sell 2,000 bottles per year. However, they also think it will reduce annual sales of Albertson by 1,000 bottles per year and reduce sales of Bumphrey by 500 bottles per year.

When estimate the cash flows for the Calvinhall wine, what amount should they use for the annual sales?

Multiple Choice

• $45,000

• $195,000

• $120,000

• $705,000

• $660,000