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 $2.61 million per year and increased operating costs of $530,934.00 per year. Caspian Sea Drinks' marginal tax rate is 21.00%. If Caspian Sea Drinks uses a 12.00% discount rate, then the net present value of the RGM-7000 is _____.

Caspian Sea Drinks' is financed with 65.00% equity and the remainder in debt. They have 10.00-year, semi-annual pay, 5.00% coupon bonds which sell for 97.60% of par. Their stock currently has a market value of $25.88 and Mr. Bensen believes the market estimates that dividends will grow at 3.19% forever. Next years dividend is projected to be $2.39. Assuming a marginal tax rate of 20.00%, what is their WACC (weighted average cost of capital)?

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