Answered step by step
Verified Expert Solution
Question
1 Approved Answer
if the answer is correct, I'll make sure to leave a thumbs up. Thank you in advance. Caspian Sea Drinks is considering the production of
if the answer is correct, I'll make sure to leave a thumbs up. Thank you in advance.
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 $24.00 million. The plant and equipment will be depreciated over 10 years to a book value of $2.00 million, and sold for that amount in year 10 . Net working capital will increase by $1.04 million at the beginning of the project and will be recovered at the end. The new diet drink will produce revenues of $8.90 million per year and cost $1.75 million per year over the 10-year life of the project. Marketing estimates 19.00% of the buyers of the diet drink will be people who will switch from the regular drink. The marginal tax rate is 20.00%. The WACC is 13.00%. Find the NPV (net present value). Answer format: Currency: Round to: 2 decimal places Step by Step Solution
There are 3 Steps involved in it
Step: 1
Get Instant Access to Expert-Tailored 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