Question
#1Caspian 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
#1Caspian 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 $12.00 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 $2.94 million per year and increased operating costs of $655,583.00 per year. Caspian Sea Drinks' marginal tax rate is 21.00%. If Caspian Sea Drinks uses a 9.00% discount rate, then the net present value of the RGM-7000 is _____.
Submit Answer format: Currency: Round to: 2 decimal places.
#2 Caspian Sea Drinks' is financed with 60.00% equity and the remainder in debt. They have 11.00-year, semi-annual pay, 5.38% coupon bonds which sell for 97.36% of par. Their stock currently has a market value of $24.90 and Mr. Bensen believes the market estimates that dividends will grow at 3.47% forever. Next years dividend is projected to be $2.63. Assuming a marginal tax rate of 27.00%, what is their WACC (weighted average cost of capital)?
Submit 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))
Step by Step Solution
There are 3 Steps involved in it
Step: 1
Get Instant Access to Expert-Tailored Solutions
See step-by-step solutions with expert insights and AI powered tools for academic success
Step: 2
Step: 3
Ace Your Homework with AI
Get the answers you need in no time with our AI-driven, step-by-step assistance
Get Started