Answered step by step
Verified Expert Solution
Link Copied!

Question

1 Approved Answer

uestion 7 (1 point) Orange Monster Drinks is considering the purchase of a plum juicer - the Moment Maid. The company is provided with the

image text in transcribed
image text in transcribed
image text in transcribed
image text in transcribed
image text in transcribed
uestion 7 (1 point) Orange Monster Drinks is considering the purchase of a plum juicer - the Moment Maid. The company is provided with the following information. a. The juicer will cost $2.5 million 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. b. The sale of new juice will generate $850,000 in sales each year for the next 15 years. c. Because of the expansion, operating costs will increase by $300,000 per year. d. 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. e. The Engineering Department spent $25,000 researching the various juicers. f. Portions of the plant floor have been redesigned to accommodate the juicer at a cost of $35,000. g. Orange Monster Drinks' marginal tax rate is 35.00%. h. Orange Monster Drinks is 55.6us e. The Engineering Department spent $25,000 researching the various juicers. f. Portions of the plant floor have been redesigned to accommodate the juicer at a cost of $35,000. g. Orange Monster Drinks' marginal tax rate is 35.00%. h. Orange Monster Drinks is 55.00% equity-financed. i. Orange Monster Drinks' 16.00-year, semi-annual pay, 6% coupon bond sells for $962.00. j. 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. What is the initial Cash Flow of this project? 2,000,0002,900,0002,750,0002,780,000 What is the annual incremental cash flow? 316,500356,500386,500406,500 Question 9 (1 point) What is the ending cash flow? 1,086,5001,070,0001,056,5001,040,000 Question 10 (1 point) What is the WACC for this company? 7.312%7.587%7.862% What is the WACC for this company? 7.312%7.587%7.862%8.012% Question 11 (1 point) What is the NPV of this project? 885,147.52947,454.90987,875.221,002,518.33 Question 12 (1 point) What is the IRR for the project? 11.77%12.71%13.73%11.770 947,454.90987,875.221,002,518.33 Question 12 (1 point) What is the IRR for the project? 11.77% 12.71% 13.73% 14.77% Question 13 (1 point) What is the modified IRR? 7.77% 8.88% 9.99% 10.10%

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

Financial Intelligence For IT Professionals

Authors: Julie Bonner

1st Edition

103215294X, 9781032152943

More Books

Students also viewed these Finance questions

Question

Whether training would be needed, and what methods would be used.

Answered: 1 week ago

Question

What should be the purpose of performance management and appraisal?

Answered: 1 week ago

Question

The issue of staff sensitivity to feedback

Answered: 1 week ago