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 costs

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 $1.53 million fully installed and has a 10 year life. It will be depreciated to a book value of $141,877.00 and sold for that amount in year 10. b. The Engineering Department spent $38,198.00 researching the various juicers. c. Portions of the plant floor have been redesigned to accommodate the juicer at a cost of $19,022.00. d. The PJX5 will reduce operating costs by $475,213.00 per year. e. CSDs marginal tax rate is 32.00%. f. CSD is 64.00% equity-financed. g. CSDs 17.00-year, semi-annual pay, 5.91% coupon bond sells for $1,040.00. h. CSDs stock currently has a market value of $20.64 and Mr. Bensen believes the market estimates that dividends will grow at 2.06% forever. Next years dividend is projected to be $1.42.

Please round answer to 2 decimals places :)

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

Healthcare Finance An Introduction To Accounting And Financial Management

Authors: Louis C. Gapenski

4th Edition

1567932800, 978-1567932805

More Books

Students also viewed these Finance questions

Question

Explore common areas of clinical focus in health psychology.

Answered: 1 week ago

Question

Explain the importance of Human Resource Management

Answered: 1 week ago

Question

Discuss the scope of Human Resource Management

Answered: 1 week ago

Question

Discuss the different types of leadership

Answered: 1 week ago

Question

Write a note on Organisation manuals

Answered: 1 week ago