Answered step by step
Verified Expert Solution
Link Copied!

Question

1 Approved Answer

Please use excel for calculations and finance calculator for cash flows. Thank you! Caspian Sea Drinks is considering the production of a diet drink. The

Please use excel for calculations and finance calculator for cash flows. Thank you!
image text in transcribed
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 \$28.00 million. 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 $1.33 Attempts Remaining: million at the beginning of the project and will be recovered at the end The new diet drink will produce revenues of $8.81 million per year and cost $1.57 million per year over the 10 -year life of the project. Marketing estimates 15.00% of the buyers of the diet drink will be people who will switch from the regular drink. The marginal tax rate is 30.00%. The WACC is 15,00%. Find the IRR (internal rate of return). Answer format: Percentage Round to: 4 decimal places (Example) 9.2434\%, \% sign required. Will accept decimal format rounded to 6 decimal places (ex.0.092434))

Step by Step Solution

There are 3 Steps involved in it

Step: 1

blur-text-image

Get Instant Access to Expert-Tailored Solutions

See step-by-step solutions with expert insights and AI powered tools for academic success

Step: 2

blur-text-image

Step: 3

blur-text-image

Ace Your Homework with AI

Get the answers you need in no time with our AI-driven, step-by-step assistance

Get Started

Recommended Textbook for

Commodity Finance Principles And Practice

Authors: Weixin Huang

1st Edition

1781371938, 978-1781371930

More Books

Students also viewed these Finance questions