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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
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 $2,800,000 fully installed and has a 15-year life. It will be depreciated to a book value of $400,000 and sold for that amount in year 15. The sale of new juice will generate $800,000 in sales each year for the next 15 years. Because of the expansion, operating costs will increase by $300,000 per year. The company will increase net working capital by $280,000 at the beginning of the project, and it will be liquidated at the end of the project. The Engineering Department spent $25,000 researching the various juicers. Portions of the plant floor have been redesigned to accommodate the juicer at cost of $35,000. Orange Monster Drinks' marginal tax rate is 25.00%. Orange Monster Drinks is 55.00% equity-financed. Orange Monster Drinks' 16.00-year, semi-annual pay, 6% coupon bond sells for $962.00. Orange Monster Drinks' stock currently has a market value of $20 and the company believes the market estimates that dividends will grow at 2.5% forever. Next year's dividend is projected to be $1.68
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