Should they produce the new coffee flavor

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Reference no: EM131085524

Nestle has spent $1 million developing a new coffee flavor at its Maryville facility and must now decide whether to produce this flavor. Production of the new flavor will result in a net present value of $600,000 if the $1 million is treated as a sunk cost; but recognizing the $1 million in the project will result in a net present value of negative $400,000. How should Nestle treat the $1 million? Why? Should they produce the new coffee flavor?

Reference no: EM131085524

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