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 $1.86 million fully installed and has a 10 year life. It will be depreciated to a book value of $220,199.00 and sold for that amount in year 10. b. The Engineering Department spent $25,345.00 researching the various juicers. c. Portions of the plant floor have been redesigned to accommodate the juicer at a cost of $17,660.00. d. The PJX5 will reduce operating costs by $401,165.00 per year. e. CSDs marginal tax rate is 26.00%. f. CSD is 67.00% equity-financed. g. CSDs 13.00-year, semi-annual pay, 5.45% coupon bond sells for $1,049.00. h. CSDs stock currently has a market value of $22.96 and Mr. Bensen believes the market estimates that dividends

will grow at 2.78% forever. Next years dividend is projected to be $1.75.