1) Caspian Sea Drinks is considering the purchase of a plum juicer the PJX5. There is no planned increase in production. The PJX5 will reduce costs by squeezing more juice from each plum and doing so in a more efficient manner. Mr. Bensen gave Derek the following information. What is the NPV of the PJX5?

a. The PJX5 will cost $2.02 million fully installed and has a 10 year life. It will be depreciated to a book value of $227,570.00 and sold for that amount in year 10.

b. The Engineering Department spent $19,107.00 researching the various juicers.

c. Portions of the plant floor have been redesigned to accommodate the juicer at a cost of $16,610.00.

d. The PJX5 will reduce operating costs by $495,066.00 per year.

e. CSDs marginal tax rate is 37.00%.

f. CSD is 63.00% equity-financed.

g. CSDs 12.00-year, semi-annual pay, 6.09% coupon bond sells for $959.00.

h. CSDs stock currently has a market value of $24.97 and Mr. Bensen believes the market estimates that dividends will grow at 4.01% forever. Next years dividend is projected to be $1.41

2) A stock just paid a dividend of $2.21. The dividend is expected to grow at 25.00% for three years and then grow at 4.94% thereafter. The required return on the stock is 11.29%. What is the value of the stock?