#32

Caspian Sea Drinks is considering buying the J-Mix 2000. It will allow them to make and sell more product. The machine cost $1.97 million and create incremental cash flows of $511,935.00 each year for the next five years. The cost of capital is 11.97%. What is the internal rate of return for the J-Mix 2000?

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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))

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#33

Caspian Sea Drinks is considering buying the J-Mix 2000. It will allow them to make and sell more product. The machine cost $1.52 million and create incremental cash flows of $500,854.00 each year for the next five years. The cost of capital is 8.57%. What is the profitability index for the J-Mix 2000?

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Answer format: Number: Round to: 3 decimal places.

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#34

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 $2.19 million fully installed and has a 10 year life. It will be depreciated to a book value of $111,699.00 and sold for that amount in year 10.

b. The Engineering Department spent $41,800.00 researching the various juicers.

c. Portions of the plant floor have been redesigned to accommodate the juicer at a cost of $15,175.00.

d. The PJX5 will reduce operating costs by $424,174.00 per year.

e. CSDs marginal tax rate is 21.00%.

f. CSD is 65.00% equity-financed.

g. CSDs 15.00-year, semi-annual pay, 6.86% coupon bond sells for $955.00.

h. CSDs stock currently has a market value of $20.79 and Mr. Bensen believes the market estimates that dividends will grow at 3.26% forever. Next years dividend is projected to be $1.43.