1. 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 $15.00 million fully installed and will be fully depreciated over a 15.00 year life, then removed for no cost. The RGM-7000 will result in additional revenues of $2.84 million per year and increased operating costs of $716,131.00 per year. Caspian Sea Drinks' marginal tax rate is 20.00%. The incremental cash flows for produced by the RGM-7000 are _____. ROUND TO: 2 DECIMAL PLACES
2. 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 $2.97 million per year and increased operating costs of $756,064.00 per year. Caspian Sea Drinks' marginal tax rate is 21.00%. The internal rate of return for the RGM-7000 is _____. ROUND TO: 4 DECIMAL PLACES
3. 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 $2.83 million per year and increased operating costs of $651,480.00 per year. Caspian Sea Drinks' marginal tax rate is 35.00%. If Caspian Sea Drinks uses a 10.00% discount rate, then the net present value of the RGM-7000 is _____. ROUND TO: 2 DECIMAL PLACES
4. Caspian Sea Drinks' is financed with 68.00% equity and the remainder in debt. They have 11.00-year, semi-annual pay, 5.57% coupon bonds which sell for 98.41% of par. Their stock currently has a market value of $25.41 and Mr. Bensen believes the market estimates that dividends will grow at 3.74% forever. Next year's dividend is projected to be $2.11. Assuming a marginal tax rate of 27.00%, what is their WACC (weighted average cost of capital)? ROUND TO: 2 DECIMAL PLACES