1. Caspian Sea Drinks is considering the purchase of a new water filtration system produced by Rube Goldberg Machines. This new equipment, the RGM-7000, will allow Caspian Sea Drinks to expand production. It will cost $14.00 million fully installed and will be fully depreciated over a 20 year life, then removed for no cost. The RGM-7000 will result in additional revenues of $3.53 million per year and increased operating costs of $638,298.00 per year. Caspian Sea Drinks' marginal tax rate is 33.00%. If Caspian Sea Drinks uses a 11.00% discount rate, then the net present value of the RGM-7000 is _____.

Answer format: Currency: Round to: 2 decimal places.

2. Caspian Sea Drinks' is financed with 67.00% equity and the remainder in debt. They have 11.00-year, semi-annual pay, 5.66% coupon bonds which sell for 97.07% of par. Their stock currently has a market value of $24.91 and Mr. Bensen believes the market estimates that dividends will grow at 3.42% forever. Next years dividend is projected to be $2.56. Assuming a marginal tax rate of 33.00%, what is their WACC (weighted average cost of capital)?

Answer format: Percentage Round to: 2 decimal places (Example: 9.24%, % sign required. Will accept decimal format rounded to 4 decimal places (ex: 0.0924))