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1 . Sparkling Water, Incorporated, expects to sell 3 . 7 million bottles of drinking water each year in perpetuity. This year each bottle will

1. Sparkling Water, Incorporated, expects to sell 3.7 million bottles of drinking water each year in perpetuity. This year each bottle will sell for $1.46 in real terms and will cost $.82 in real terms. Sales income and costs occur at year-end. Revenues will rise at a real rate of 1.9 percent annually, while real costs will rise at a real rate of .9 percent annually. The real discount rate is 6 percent. The corporate tax rate is 24 percent. What is the value of the firm today? (Do not round intermediate calculations and enter your answer in dollars, not millions of dollars, rounded to the nearest whole number, e.g.,1,234,567.)
2. You are evaluating two different silicon wafer milling machines. The Techron I costs $264,000, has a 3-year life, and has pretax operating costs of $71,000 per year. The Techron II costs $460,000, has a 5-year life, and has pretax operating costs of $44,000 per year. For both milling machines, use straight-line depreciation to zero over the projects life and assume a salvage value of $48,000. If your tax rate is 22 percent and your discount rate is 12 percent, compute the EAC for both machines Techron I and Techron II.(A negative answer should be indicated by a minus sign. Do not round intermediate calculations and round your answers to 2 decimal places, e.g.,32.16.)

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