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i'm reposting b/c someone answered incorrectly Caspian Sea Drinks is considering the purchase of a plum juicer - the PJX5. There is no planned increase
i'm reposting b/c someone answered incorrectly
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 $1.56 million fully installed and has a 10 year life. It will be depreciated to a book value of $214,624.00 and sold for that amount in year 10. b. The Engineering Department spent $45,844.00 researching the various juicers. c. Portions of the plant floor have been redesigned to accommodate the juicer at a cost of $23,711.00. d. The PJX5 will reduce operating costs by $485,862.00 per year. e. CSD's marginal tax rate is 28.00%. f. CSD is 62.00% equity-financed. g. CSD's 20.00-year, semi-annual pay, 5.45% coupon bond sells for $950.00. h. CSD's stock currently has a market value of $22.81 and Mr. Bensen believes the market estimates that dividends will grow at 2.22% forever. Next year's dividend is projected to be $1.45Step by Step Solution
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