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 IRR of the PJX5? a. The PJX5 will cost $2.41 million fully installed and has a 10 year life. It will be depreciated to a book value of $152,326.00 and sold for that amount in year 10. b. The Engineering Department spent $18,555.00 researching the various juicers. c. Portions of the plant floor have been redesigned to accommodate the juicer at a cost of $20,285.00. d. The PJX5 will reduce operating costs by $359,434.00 per year. e. CSDs marginal tax rate is 25.00%. f. CSD is 57.00% equity-financed. g. CSDs 14.00-year,

semi-annual pay, 6.45% coupon bond sells for $1,023.00. h. CSDs stock currently has a market value of $24.08 and Mr. Bensen believes the market estimates that dividends will grow at 4.41% forever. Next years dividend is projected to be $1.76.