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USE THE INFORMATION BELOW TO ANSWER THE FOLLOWING FIVE (5) QUESTIONS Orange Monster Drinks is considering the purchase of a plum juicer - the Moment
USE THE INFORMATION BELOW TO ANSWER THE FOLLOWING FIVE (5) QUESTIONS Orange Monster Drinks is considering the purchase of a plum juicer - the Moment Maid. The company is provided with the following information. Orange Monster Drinks is considering the purchase of a plum juicer - the Moment Maid. The company is provided with the following information. - The juicer will cost $4,825,000, 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 . - The new juicer will generate $950,000 in sales each year for the next 15 years. - Because of the expansion, operating costs will increase by $300,000 per year. - The company will increase net working capital by $70,000 at the beginning of the project; this amount will be recovered at the end of the life of the project. - The Engineering department spent $45,000 researching the various juicers. - Last month, portions of the plant floor were redesigned to accommodate the juicer. The cost of this modification was $175,000. The company that did the work sent Orange Monster Drinks an invoice last week; Orange Monster Drinks plans to pay the $175,000 tomorrow. - Orange Monster Drinks' marginal tax rate is 30%. - Orange Monster Drinks is 55\% equity-financed and 45% debt financed. - Orange Monster Drinks' 25-years remaining to maturity, semi-annual payment, 6% coupon bonds sell for $916.00. - Orange Monster Drinks' stock currently has a market value of $20.00 and the company believes the market estimates that dividends will grow at 2.75% forever. Next year's dividend is projected to be $1.68. 39. The initial cash flow of the project is $ 40. The incremental total cash flow of the project is in year 15 is $ 41. The IRR of the project is %. 42. The WACC of the Orange Monster Drinks is %. 43. The NPV of the project is $
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