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URGENT!!! PLS EXPERT on material ONLY Caspian Sea Drinks is considering the production of a diet drink. The expansion of the plant and the purchase
URGENT!!! PLS EXPERT on material ONLY
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 $26.00 million. The plant and equipment will be depreciated over 10 years to a book value of $3.00 million, and sold for that amount in year 10 . Net working capital will increase by $1.36 million at the beginning of the project and will be recovered at the end. The new diet drink will produce revenues of $9.44 million per year and cost $2.30 million per year over the 10 -year life of the project. Marketing estimates 11.00% of the buyers of the diet drink will be people who will switch from the regular drink. The marginal tax rate is 27.00%. The WACC is 15.00%. 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 $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 $1.47 million at the beginning of the project and will be recovered at the end. The new diet drink will produce revenues of $8.72 million per year and cost $1.57 million per year over the 10 -year life of the project. Marketing estimates 19.00% of the buyers of the diet drink will be people who will switch from the regular drink. The marginal tax rate is 25.00%. The WACC is 12.00%. 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
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