Case Facts Used in this Scenario

Revenues from MM Beer in 2005

Contribution Margin
Annual Change in MM Beer Revenues
Annual Change in East Central Light Beer Market
# Barrels of MM Beer
Variable Cost per Barrel MM Beer
Increase in Variable Cost of MM Light Beer (If launched)
Loss of Revenue
East Central Light Beer Market in 2005
Annual Change East Central Light Beer Market
Contribution per barrel of light beer

2 and 5 Year NPV Calculations

Year 2006 2007
Revenues from MM Beer
Contribution
Loss of Contribution

Launch Advertising Cost of MM Light

Incremental SG&A
Total Incremental Costs associated with MM Light

East Central Light Market

Assumed Market for Light Beer
Market Share for MM Light
Barrels Sold MM Light

Contribution

Net Change in Contribution

Present Value (*use formula for NPV)

2 Year NPV of Launch Effect

5 Year NPV of Launch Effect

 Source

$50,440,000 Exhibit 1
31.0% Exhibit 1
-2.0% Case Fact Page 6
4.0% Exhibit 5
520,000 Case Fact Page 3
$66.93 Case Fact Page 6
$4.69 Case Fact Page 6
-5% * Ranges from 5% to 20% as given in case
18,744,303 Exhibit 5
4.0% Exhibit 5
$25.38 Based on calculation

2008 2009 2010