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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

image text in transcribed 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 16.00 year life, then removed for no cost. The RGM-7000 will result in additional revenues of $2.72 million per year and increased operating costs of $621,760.00 per year. Caspian Sea Drinks' marginal tax rate is 20.00%. The incremental cash flows for produced by the RGM-7000 are Attempts Remaining: Infinity Answer format: Currency: Round to: 2 decimal places. 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 15 year life, then removed for no cost. The RGM-7000 will result in additional revenues of $3.08 million per year and increased operating costs of $706,551.00 per year. Caspian Sea Drinks' marginal tax rate is 29.00%. The internal rate of return for the RGM-7000 is Attempts Remaining: Infinity 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 $2.82 million per year and increased operating costs of $688,606.00 per year. Caspian Sea Drinks' marginal tax rate is 30.00%. If Caspian Sea Drinks uses a 9.00% discount rate, then the net present value of the Attempts Remaining: Infinity RGM-7000 is Answer format: Currency: Round to: 2 decimal places. Caspian Sea Drinks' is financed with 67.00% equity and the remainder in debt. They have 12.00 -year, semi-annual pay, 5.13% coupon bonds which sell for 98.41% of par. Their stock currently has a market value of $25.21 and Mr. Bensen believes the market estimates that dividends will grow at 3.42\% forever. Next year's dividend is projected to be $2.26. Assuming a marginal tax rate of 34.00%, what is their WACC (weighted average cost of capital)? Attempts Remaining: Infinity 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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