rs $32-$ graded

#$1$

Caspian Sea Drinks is considering the purchase of a plum juicer $-$ the PJX$5.$ There is no planned increase in production. The PJX$5$ will reduce costs by squeezing more juice from each plum and doing so in a more efficient manner. Mr$.$ Bensen gave Derek the following information. What is the NPV of the PJX$5?$

a$.$ The PJX$5$ will cost $$1\mathrm{.}59$ million fully installed and has a $10$ year life. It will be depreciated to a book value of $$146,911\mathrm{.}00$ and sold for that amount in year $10.$

b$.$ The Engineering Department spent $$43,790\mathrm{.}00$ researching the various juicers.

c$.$ Portions of the plant floor have been redesigned to accommodate the juicer at a cost of $$16,479\mathrm{.}00.$

d$.$ The PJX$5$ will reduce operating costs by $$443,724\mathrm{.}00$ per year.

e$.$ CSD$\text{'}$s marginal tax rate is $25\mathrm{.}00\%.$

f$.$ CSD is $61\mathrm{.}00\%$ equity$-$financed.

g$.$ CSD$\text{'}$s $14\mathrm{.}00-$year, semi$-$annual pay, $5\mathrm{.}24\%$ coupon bond sells for $$988\mathrm{.}00.$

h$.$ CSD$\text{'}$s stock currently has a market value of $$20\mathrm{.}77$ and Mr$.$ Bensen believes the market estimates that dividends will grow at $3\mathrm{.}70\%$ forever. Next year's dividend is projected to be $$1\mathrm{.}56.$