Answered step by step
Verified Expert Solution
Link Copied!

Question

1 Approved Answer

#1 Caspian Sea Drinks is considering the purchase of a plum juicer - the PJX5. There is no planned increase in production The PJX5 will

image text in transcribed
#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 $1.56 million fully installed and has a 10 year life. It will be depreciated to a book value of $197.526.00 and sold for that amount in year 10. b. The Engineering Department spent $48,324.00 researching the various juicers. C. Portions of the plant floor have been redesigned to accommodate the juicer at a cost of $17.719.00 d. The PJX5 will reduce operating costs by $459,935.00 per year. e CSD's marginal tax rate is 24.00% 1. CSD is 63.00% equity-financed g. CSD's 12.00-year, semi-annual pay, 5.75% coupon bond sells for $1,042.00 h. CSD's stock currently has a market value of $23 24 and Mr. Bensen believes the market estimates that dividends will grow at 4.14% forever. Next year's dividend is projected to be $1 41 Submit Answer format: Currency: Round to: 2 decimal places

Step by Step Solution

There are 3 Steps involved in it

Step: 1

blur-text-image

Get Instant Access to Expert-Tailored Solutions

See step-by-step solutions with expert insights and AI powered tools for academic success

Step: 2

blur-text-image

Step: 3

blur-text-image

Ace Your Homework with AI

Get the answers you need in no time with our AI-driven, step-by-step assistance

Get Started

Recommended Textbook for

Accounting Audits In The Democratic Republic Of Congo

Authors: Charles Kyungu Kakudji

1st Edition

6206327043, 978-6206327042

More Books

Students also viewed these Accounting questions