Answered step by step
Verified Expert Solution
Question
1 Approved Answer
Please answer questions 1-4 Caspian Sea Drinks is considering the purchase of a plum julcer - the P.JX5. There is no planned increase in production,
Please answer questions 1-4
Caspian Sea Drinks is considering the purchase of a plum julcer - the P.JX5. There is no planned increase in production, The P.JX5 will reduce costs by squeezing more juice from each plum and doing so in a more efficlont mannor. Mr. Bensen gave Derek the following information. What is the NPV of the PJX5? a. The PJX5 will cost $2.23 million fully installed and has a 10 year life. It wil be depreciated to a book value of $204,422.00 and sold for that amount in year 10 . Attempts Remaining: Infinity b. The Engineering Department spent $12,217.00 researching the various julcers. c. Portions of the plant floor have been redesigned to accommodate the jucer at a cost of $17,246.00. d. The P.JX5 will reduce operating costs by $359,930.00 per year. e. CSD's maginal tax rate is 36.00%. t. CSD is 60.00% equity-financed. a. CSO's 20.00 year, semi-annual pay, 6.44\% coupon bond sells for $1,023.00. h. CSOs stock currently has a market value of $24,11 and Mr. Bensen believes the market estimates that dividends wil grow at 2.52% forever. Next year's dividend is projected to be $1,56. Answer format Curengr, Aound to: 2 decimal places. Casplan Sea Orinks is considering the purchase of a plum jucer - the PuX5. Thern ia no planned inerease in preduction. The PJXS wall reduce costs by squesing more juce from each plum and doing so in a more efficient manner. M. Bensen pave Derck the following information What is the IRR of the P.JXS? a. The P.XK5 will cost $2.36 mition fuly installed and has a 10 year life. It wil be depreciated to a book value of $204,513.00 and sold for that amount in yoar 10 . Atempts Pemwing: infinty b. The Engineering Departirent spent $18,461.00 researching the various juicon. c. Portions of the plant foor have been redesigned to accornmodate the juicer at a cost of $18,989.00. d. The P.JS wal reduce operating oosts by $493,606.00 per year. e. CSDr marginal tou rate is 26.00%. 1. CSD is 50.00% equity-financed. 9. CSDs 10.00 yoar, sent-annual pay, 5.57% coupon bond sells for $1,02000. n. CSD's stock currently has a market vave of $21.80 and M. Bensen believes the market estimates that dividionds will grow at 3,68% forover. Next year's dividend is projected to be $1.67. Answer format: Fersentage Round to: 2 decimal places fexample: 9.24%, \% sign required. Whe accept docimal formut 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 $25.00million. 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 $1.40 milion at the beginning of the project and will be recovered at the end. The new diet drink will produce revenues of $9.06 million per year and cost \$2.09 million per year over the 10-year life of the project. Marketing estimates 12.00% of thio buyers of the diet drink will be people who will switch from the regular drink. The marginal tax rate is 22.00%. The WACC is 14.00%. Find the NPV (net present value). Answer format: Currency: Round to: 2 decimal places. 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 $27.00 million. The plant and equipment will be depreciated over 10 years to a book value of $1.00 million, and sold for that amount in year 10 . Net working capital will increase by $1.46 million at the beginning of the project and will be recovered at the end. The new diet drink will produce revenues of $9.27 million per year and cost $1.62 million per year over the 10 -year life of the project. Marketing estimates 14.00% of the buyors of the diet drink will be people who will switch from the regular drink. The marginal tax rate is 23.00%. The WACC is 10.00%. Find the IRR (internal rate of return). Answer format: Percentage Round to: 4 docimal places (Example: 9.2434%,% sign requirod. Wil accept decimal format rounded to 6 decimal places (ex: 0.092434) 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