Question
Part 1. Caspian Sea Drinks is considering the purchase of a new water filtration system produced by Rube Goldberg Machines. This new equipment, the RGM-7000,
Part 1. Caspian Sea Drinks is considering the purchase of a new water filtration system produced by Rube Goldberg Machines. This new equipment, the RGM-7000, will allow Caspian Sea Drinks to expand production. It will cost $13.00 million fully installed and will be fully depreciated over a 17.00 year life, then removed for no cost. The RGM-7000 will result in additional revenues of $2.66 million per year and increased operating costs of $656,619.00 per year. Caspian Sea Drinks' marginal tax rate is 22.00%. The incremental cash flows for produced by the RGM-7000 are _____.?
Part 2. Caspian Sea Drinks is considering the purchase of a new water filtration system produced by Rube Goldberg Machines. This new equipment, the RGM-7000, will allow Caspian Sea Drinks to expand production. It will cost $14.00 million fully installed and will be fully depreciated over a 15 year life, then removed for no cost. The RGM-7000 will result in additional revenues of $2.90 million per year and increased operating costs of $785,017.00 per year. Caspian Sea Drinks' marginal tax rate is 24.00%. The internal rate of return for the RGM-7000 is _____.?
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