Answered step by step
Verified Expert Solution
Question
1 Approved Answer
Casplan Sea Drinks is considering the purchase of a new water filtration system produced by Rube Goldberg Machinas. This new equipment, the RGM-7000, will allow
Casplan Sea Drinks is considering the purchase of a new water filtration system produced by Rube Goldberg Machinas. This new equipment, the RGM-7000, will allow Caspian Sen Drinks to expand production. It will cost $12.00 million fully installed and will be fully depreciated over a 20 year lifo, then removed for no cost. The ACM-7000 will result in additional revenues of $3.82 million per year and increasod operating costs of $674,812.00 per year. Caspian Sea Drinks' marginal tax rate is 20.00%. If Caspian Sea Drinks uses a 12.00% discount rate, then the net present value of the RGM-7000 is Answer format: Currency: Round to: 2 decimal places. Catspian Sea Drinks' is financed with 67.00% equity and the remainder in debt. They have 10.00 -year, semi-annual pay, 5.17% coupon borids which sell for 98.13% of par. Their stock cutrently has a market value of $25.96 and Mr, Bensen believes the market estimates that dividends will grow at 3,60% forever. Next year's dividend is projected to be $2.82. Assuming a marginal tax rate of 27.00%, what is their WACC (weighted average cost of capital)? Answer format Percentage Round to: 2 decimal places (Example: 9.24%,% sign required Wil accept decimal format rounded to 4 decimal places (ex: 0.0924 )
Step by Step Solution
There are 3 Steps involved in it
Step: 1
Get Instant Access with AI-Powered Solutions
See step-by-step solutions with expert insights and AI powered tools for academic success
Step: 2
Step: 3
Ace Your Homework with AI
Get the answers you need in no time with our AI-driven, step-by-step assistance
Get Started