Answered step by step
Verified Expert Solution
Link Copied!

Question

1 Approved Answer

Caspian Sea Drinks is considering the purchase of a plum juicer - the PJX5. There is no planned increase in production. The PJX5 will reduce

image text in transcribed

Caspian Sea Drinks is considering the purchase of a plum juicer - the PJX5. There is no planned increase in production. The PJX5 will reduce costs by squeezing more juice from each plum and doing so in a more efficient manner. Mr. Bensen gave Derek the following information. What is the NPV of the PJX5? a. The PJX5 will cost $1.64 million fully installed and has a 10 year life. It will be depreciated to a book value of $125,643.00 and sold for that amount in year 10 . b. The Engineering Department spent $20,864.00 researching the various juicers. c. Portions of the plant floor have been redesigned to accommodate the juicer at a cost of $23,269.00. d. The PJX5 will reduce operating costs by $374,302.00 per year. e. CSD's marginal tax rate is 33.00%. f. CSD is 74.00% equity-financed. g. CSD's 10.00-year, semi-annual pay, 5.77\% coupon bond sells for $991.00. h. CSD's stock currently has a market value of $20.51 and Mr. Bensen believes the market estimates that dividends will grow at 2.88% forever. Next year's dividend is projected to be $1.50

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

The Palgrave International Handbook Of Basic Income

Authors: Malcolm Torry

1st Edition

3030236137, 978-3030236137

More Books

Students also viewed these Finance questions

Question

4. Devise an interview strategy from the interviewers point of view

Answered: 1 week ago