Answered step by step
Verified Expert Solution
Link Copied!

Question

1 Approved Answer

can someone please do all three i am very desperate Caspian Sea Drinks is considering the purchase of a new water filtration system produced by

image text in transcribed

can someone please do all three i am very desperate

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 15 year life, then removed for no cost. The RGM-7000 will result in additional revenues of $3.04 million per year and increased operating costs of $672,032.00 per year. Caspian Sea Drinks' marginal tax rate is 33.00%. The internal rate of return for the RGM- 7000 is Answer format: Percentage Round to: 4 decimal places (Example: 9.2434\%, \% sign required. Will accept decimal format rounded to 6 decimal places (ex: 0.092434) ) 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 $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 $3.22 million per year and increased operating costs of $682,061.00 per year. Caspian Sea Drinks' marginal tax rate is 31.00%. If Caspian Sea Drinks uses a 10.00% discount rate, then the net present value of the RGM-7000 is Answer format: Currency: Round to: 2 decimal places. Caspian Sea Drinks' is financed with 69.00% equity and the remainder in debt. They have 11.00-year, semi-annual pay, 5.89% coupon bonds which sell for 97.12% of par. Their stock currently has a market value of $25.38 and Mr. Bensen believes the market estimates that dividends will grow at 3.36% forever. Next year's dividend is projected to be $2.83. Assuming a marginal tax rate of 35.00%, what is their WACC (weighted average cost of capital)

Step by Step Solution

There are 3 Steps involved in it

Step: 1

blur-text-image

Get Instant Access to Expert-Tailored Solutions

See step-by-step solutions with expert insights and AI powered tools for academic success

Step: 2

blur-text-image

Step: 3

blur-text-image

Ace Your Homework with AI

Get the answers you need in no time with our AI-driven, step-by-step assistance

Get Started

Recommended Textbook for

International Corporate Finance

Authors: Mark R. Eaker, Frank J. Fabozzi, Dwight Grant

1st Edition

0030693063, 9780030693069

More Books

Students also viewed these Finance questions

Question

L A -r- P[N]

Answered: 1 week ago