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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 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. Mr. Bensen gave Derek the following information. Use it to estimate the incremental cash flows for produced by the RGM-7000. Then find the IRR. a. The RGM- 7000 will cost $12,000,000 fully installed. It will be fully depreciated over a 15 year life, then removed for no cost. b. The RGM- 7000 will result in additional revenues of $2,800,000 per year and increased operating costs by $700,000 per year. c. CSD's marginal tax rate is 40%
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