Caffeine Blaster Beverage Company, Inc. manufactures and distributes a variety of soft drinks including sodas and juices. They are considering expanding the business, but are unsure if they are better to expand through the purchase of another company, or by adding to their current product lines. The finance department as been asked to investigate these options from a financial analysis perspective. Two companies have been identified for purchase, along with the most favorable areas for expansion into new product lines. Your supervisor has provided you with information on the purchase and projections for both potential companies for purchase, along with the information on the two new beverage lines-seltzer and ice teas (data below). To help gain a better understanding of each option, you have been asked to provide the following data for each of the 4 projects: Calculate the minimum payback period • Calculate the NPV of projected cash flows Calculate the Internal Rate of Return (IRR) The company assumes a discount rate of 6% for all projects, and wants the shortest payback period possible while maximizing profits. Once you have calculated the data for each potential project, you are asked to make a recommendation to the CFO based on your findings. This will be used to make a suggestion to the company leadership on how Caffeine Blaster Beverage Company, Inc. should proceed for their expansion. In a 1-2 paragraph explanation, address the following (in the spreadsheet or a separate word processing document): • Identify your top suggested project. Explain why you are making this recommendation, referencing your calculations and what this data could mean for the future of your company. Identify the lowest project in your priority list. Explain why this project should be eliminated and NOT pursued. Reference your calculations and why this project is not a good idea. • Write ups should be professional and follow all rules of grammar/spelling and APA. They should not exceed one page in length. Data for each of the projects is outlined below. Use the template for your calculations. One tab per project has been created to help keep all data together and consistent for each project.

Caffeine Blaster Beverage Company, Inc. manufactures and distributes a variety of soft drinks including sodas and juices. They are considering expanding the business, but are unsure if they are better to expand through the purchase of another company, or by adding to their current product lines. The finance department as been asked to investigate these options from a financial analysis perspective. Two companies have been identified for purchase, along with the most favorable areas for expansion into new product lines. Your supervisor has provided you with information on the purchase and projections for both potential companies for purchase, along with the information on the two new beverage lines-seltzer and ice teas (data below). To help gain a better understanding of each option, you have been asked to provide the following data for each of the 4 projects: Calculate the minimum payback period • Calculate the NPV of projected cash flows Calculate the Internal Rate of Return (IRR) The company assumes a discount rate of 6% for all projects, and wants the shortest payback period possible while maximizing profits. Once you have calculated the data for each potential project, you are asked to make a recommendation to the CFO based on your findings. This will be used to make a suggestion to the company leadership on how Caffeine Blaster Beverage Company, Inc. should proceed for their expansion. In a 1-2 paragraph explanation, address the following (in the spreadsheet or a separate word processing document): • Identify your top suggested project. Explain why you are making this recommendation, referencing your calculations and what this data could mean for the future of your company. Identify the lowest project in your priority list. Explain why this project should be eliminated and NOT pursued. Reference your calculations and why this project is not a good idea. • Write ups should be professional and follow all rules of grammar/spelling and APA. They should not exceed one page in length. Data for each of the projects is outlined below. Use the template for your calculations. One tab per project has been created to help keep all data together and consistent for each project.

Survey of Accounting (Accounting I)

8th Edition

ISBN:9781305961883

Author:Carl Warren

Publisher:Carl Warren

Chapter12: Differential Analysis And Product Pricing

Section: Chapter Questions

Problem 2CDQ

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