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 $2.04 million fully installed and has a 10 year life. It will be depreciated to a book value of $202,225.00 and sold for that amount in year 10.

b. The Engineering Department spent $47,906.00 researching the various juicers.

c. Portions of the plant floor have been redesigned to accommodate the juicer at a cost of $17,639.00.

d. The PJX5 will reduce operating costs by $480,786.00 per year.

e. CSDs marginal tax rate is 22.00%.

f. CSD is 65.00% equity-financed.

g. CSDs 15.00-year, semi-annual pay, 5.89% coupon bond sells for $1,047.00.

h. CSDs stock currently has a market value of $22.53 and Mr. Bensen believes the market estimates that dividends will grow at 4.29% forever. Next years dividend is projected to be $1.72.

2.) 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 IRR of the PJX5?

a. The PJX5 will cost $2.13 million fully installed and has a 10 year life. It will be depreciated to a book value of $206,830.00 and sold for that amount in year 10.

b. The Engineering Department spent $31,414.00 researching the various juicers.

c. Portions of the plant floor have been redesigned to accommodate the juicer at a cost of $18,605.00.

d. The PJX5 will reduce operating costs by $332,385.00 per year.

e. CSDs marginal tax rate is 22.00%.

f. CSD is 73.00% equity-financed.

g. CSDs 14.00-year, semi-annual pay, 5.44% coupon bond sells for $962.00.

h. CSDs stock currently has a market value of $20.81 and Mr. Bensen believes the market estimates that dividends will grow at 3.72% forever. Next years dividend is projected to be $1.52.