Answer Happy

Caspian Sea Drinks is considering the purchase of a plum juicer
– the PJX5. There is no planned increase in production. The PJX5
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 PJX5?
a. The PJX5 will cost $2.45 million fully installed and has a 10
year life. It will be depreciated to a book value of $105,112.00
and sold for that amount in year 10.
b. The Engineering Department spent $25,165.00 researching the
various juicers.
c. Portions of the plant floor have been redesigned to
accommodate the juicer at a cost of $24,354.00.
d. The PJX5 will reduce operating costs by $414,378.00 per
year.
e. CSD’s marginal tax rate is 34.00%.
f. CSD is 73.00% equity-financed.
g. CSD’s 13.00-year, semi-annual pay, 6.89% coupon bond sells
for $953.00.
h. CSD’s stock currently has a market value of $23.83 and Mr.
Bensen believes the market estimates that dividends will grow at
2.92% forever. Next year’s dividend is projected to be $1.69.
#1 Caspian Sea Drinks is considering the purchase of a plum juicer - the PJX5. There is no planned increase in production. The PJX5 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 PJX5? a. The PJX5 will cost $2.45 million fully installed and has a 10 year life. It will be depreciated to a book value of $105,112.00 and sold for that amount in year 10. b. The Engineering Department spent $25,165.00 researching the various juicers. c. Portions of the plant floor have been redesigned to accommodate the juicer at a cost of $24,354.00. d. The PJX5 will reduce operating costs by $414,378.00 per year. e. CSD's marginal tax rate is 34.00%. f. CSD is 73.00% equity-financed. g. CSD's 13.00-year, semi-annual pay, 6.89% coupon bond sells for $953.00. h. CSD's stock currently has a market value of $23.83 and Mr. Bensen believes the market estimates that dividends will grow at 2.92% forever. Next year's dividend is projected to be $1.69. Submit Answer format: Currency: Round to: 2 decimal places.