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Orange Monster Drinks is considering the purchase of a plum juicer the Moment Maid. The company is provided with the following information. The juicer will
Orange Monster Drinks is considering the purchase of a plum juicer the Moment Maid. The company is provided with the following information.
The juicer will cost $ fully installed, and has a year life. It will be depreciated to a book value of $ and sold for that amount in year
The new juicer will generate $ in sales each year for the next years.
Because of the expansion, operating costs will increase by $ per year.
The company will increase net working capital by $ at the beginning of the project; this amount will be recovered at the end of the life of the project.
The Engineering department spent $ researching the various juicers.
Last month, portions of the plant floor were redesigned to accommodate the juicer. The cost of this modification was $ The company that did the work sent Orange Monster Drinks an invoice last week; Orange Monster Drinks plans to pay the $ tomorrow.
Orange Monster Drinks marginal tax rate is
Orange Monster Drinks is equityfinanced and debt financed.
Orange Monster Drinksyears remaining to maturity, semiannual payment, coupon bonds sell for $
Orange Monster Drinks stock currently has a market value of $ and the company believes the market estimates that dividends will grow at forever. Next years dividend is projected to be $
The WACC of the Orange Monster Drinks is
What is the NPV of this project?
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