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

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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 $1.95 million fully installed and has a 10 year life. It will be depreciated to a book value of $279,225.00 and sold for that amount in year 10. b. The Engineering Department spent $20,454.00 researching the various juicers. c. Portions of the plant floor have been redesigned to accommodate the juicer at a cost of $18,948.00. d. The PJX5 will reduce operating costs by $461,661.00 per year. e. CSD's marginal tax rate is 26.00%. f. CSD is 57.00% equity-financed. g. CSD's 13.00-year, semi-annual pay, 5.61% coupon bond sells for $954.00. h. CSD's stock currently has a market value of \$22.37 and Mr. Bensen believes the market estimates that dividends will grow at 4.19% forever. Next year's dividend is projected to be $1.73. Answer format: Currency: Round to: 2 decimal places. Caspian Sea Drinks is considering the production of a diet drink. The expansion of the plant and the purchase of the equipment necessary to produce the diet drink will cost $25.00 million. The plant and equipment will be depreciated over 10 years to a book value of \$1.00 million, and sold for that amount in year 10 . Net working capital will increase by $1.25 million at the beginning of the project and will be recovered at the end. The new diet drink will produce revenues of $9.11 million per year and cost \$1.89 million per year over the 10-year life of the project. Marketing estimates 18.00\%6 of the buyers of the diet drink will be people who will switch from the regular drink. The marginal tax rate is 30.00%. The WACC is 15.00%. Find the NPV (net present value)

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