The Nutrition Division [MD] of Regal Foods {Regal} focuses on health-related products. Historically, the ND has been an excellent contributor to group performance, with annual growth rates of up to 12% for the period 2010 to 2015, and revenues exceeding $2billlon. Regal currently uses a common capital investment evaluation process for all investment projects in excess of $10 million. A summary of key criteria includes: in Projects must generate a positive NPU over the life of the project. an A minimum annual return-on-investment {RDlj of 10% must be achievable within two years of the project commencing. Bernard Buncle (the manager of the Nutrition Division} and his management are contemplating a major investment in the bottled water industry. While the industry has its challenges {for example, environmental opposition to the use of plastic bottles; tightening environmental regulations; and, the expectation of senior management to reduce carbon emissions], Buncle and his management team see a lot of potential with such a strategic move. However, this project requires signicant capital expenditure and Buncle is frustrated by the company's investment decision making processes. He believes the current criteria makes it difficult to pursue strategic investments like the bottled water project; particularly when competing with other projects for limited funds. The management team within ND has identied a new spring water source in a regional area - Hepburn Shire. ND plans to build a new water bottling plant to take advantage of the springs. The local authorities are happy to support the project. in fact, the local authorities are willing to forego local taxes and provide subsidies to MD to ensure the plant is built. These benets have been built into the NPV calculation. The region has experienced relatively high levels of unemployment in recent years and the new plant will generate some 100 local new jobs. While there is some local opposition to the new facility on environmental grounds, Buncle considers these are manageable. Preliminaryr investigations by engineers suggest signicant expenditure will be necessary to deal with the removal of waste generated in the process of producing the water. While the costs have been built into the NW, some managers are concerned about this aspect of the project. Buncle believes the investment is a good strategic move for his division {particularly with the synergies expected with other parts of the division's activities], is in-Iine 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