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 $13.00 million fully installed and will be fully depreciated over a 15 year life, then removed for no cost. The RGM-7000 will result in additional revenues of $3.35 million per year and increased operating costs of $633,619.00 per year. Caspian Sea Drinks' marginal tax rate is 32.00%. The internal rate of return for the RGM-7000 is _____.

2.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 $3.21 million per year and increased operating costs of $560,261.00 per year. Caspian Sea Drinks' marginal tax rate is 20.00%. If Caspian Sea Drinks uses a 8.00% discount rate, then the net present value of the RGM-7000 is _____.

3.Caspian Sea Drinks' is financed with 67.00% equity and the remainder in debt. They have 12.00-year, semi-annual pay, 5.76% coupon bonds which sell for 97.78% of par. Their stock currently has a market value of $25.40 and Mr. Bensen believes the market estimates that dividends will grow at 3.25% forever. Next years dividend is projected to be $2.04. Assuming a marginal tax rate of 27.00%, what is their WACC (weighted average cost of capital)?