1a.

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 $2.32 million fully installed and has a 10 year life. It will be depreciated to a book value of $261,111.00 and sold for that amount in year 10.

b. The Engineering Department spent $17,140.00 researching the various juicers.

c. Portions of the plant floor have been redesigned to accommodate the juicer at a cost of $20,583.00.

d. The PJX5 will reduce operating costs by $415,181.00 per year.

e. CSDs marginal tax rate is 35.00%.

f. CSD is 56.00% equity-financed.

g. CSDs 20.00-year, semi-annual pay, 6.49% coupon bond sells for $994.00.

h. CSDs stock currently has a market value of $21.33 and Mr. Bensen believes the market estimates that dividends will grow at 2.24% forever. Next years dividend is projected to be $1.53.

1b.

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 $2.02 million fully installed and has a 10 year life. It will be depreciated to a book value of $128,695.00 and sold for that amount in year 10.

b. The Engineering Department spent $21,915.00 researching the various juicers.

c. Portions of the plant floor have been redesigned to accommodate the juicer at a cost of $15,163.00.

d. The PJX5 will reduce operating costs by $420,562.00 per year.

e. CSDs marginal tax rate is 20.00%.

f. CSD is 74.00% equity-financed.

g. CSDs 12.00-year, semi-annual pay, 6.77% coupon bond sells for $993.00.

h. CSDs stock currently has a market value of $23.63 and Mr. Bensen believes the market estimates that dividends will grow at 3.63% forever. Next years dividend is projected to be $1.48.

1c.

Caspian Sea Drinks is considering the production of a diet drink. The expansion of the plant and the purchase of the equipment necessary to produce the diet drink will cost $27.00 million. The plant and equipment will be depreciated over 10 years to a book value of $2.00 million, and sold for that amount in year 10. Net working capital will increase by $1.22 million at the beginning of the project and will be recovered at the end. The new diet drink will produce revenues of $8.61 million per year and cost $1.70 million per year over the 10-year life of the project. Marketing estimates 11.00% of the buyers of the diet drink will be people who will switch from the regular drink. The marginal tax rate is 29.00%. The WACC is 12.00%. Find the NPV (net present value).

1d.

Caspian Sea Drinks is considering the production of a diet drink. The expansion of the plant and the purchase of the equipment necessary to produce the diet drink will cost $24.00 million. The plant and equipment will be depreciated over 10 years to a book value of $1.00 million, and sold for that amount in year 10. Net working capital will increase by $1.15 million at the beginning of the project and will be recovered at the end. The new diet drink will produce revenues of $8.51 million per year and cost $1.85 million per year over the 10-year life of the project. Marketing estimates 13.00% of the buyers of the diet drink will be people who will switch from the regular drink. The marginal tax rate is 22.00%. The WACC is 10.00%. Find the IRR (internal rate of return).

Can you help me with these 4 parts ? Thank You!