Caspian Sea Drinks is considering the purchase of a plum juicer - the PJX5. There is...
Fantastic news! We've Found the answer you've been seeking!
Question:
Transcribed Image Text:
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 IRR of the PJX5? a. The PJX5 will cost $2.15 million fully installed and has a 10 year life. It will be depreciated to a book value of $276,228.00 and sold for that amount in year 10. b. The Engineering Department spent $43,761.00 researching the various juicers. c. Portions of the plant floor have been redesigned to accommodate the juicer at a cost of $21,593.00. d. The PJX5 will reduce operating costs by $422,201.00 per year. e. CSD's marginal tax rate is 28.00%. f. CSD is 59.00% equity-financed. g. CSD's 13.00-year, semi-annual pay, 6.03% coupon bond sells for $1,013.00. h. CSD's stock currently has a market value of $20.91 and Mr. Bensen believes the market estimates that dividends will grow at 3.95% forever. Next year's dividend is projected to be $1.54. Submit Answer format: Percentage Round to: 2 decimal places (Example: 9.24%, % sign required. Will accept decimal format rounded to 4 decimal places (ex: 0.0924)) 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 IRR of the PJX5? a. The PJX5 will cost $2.15 million fully installed and has a 10 year life. It will be depreciated to a book value of $276,228.00 and sold for that amount in year 10. b. The Engineering Department spent $43,761.00 researching the various juicers. c. Portions of the plant floor have been redesigned to accommodate the juicer at a cost of $21,593.00. d. The PJX5 will reduce operating costs by $422,201.00 per year. e. CSD's marginal tax rate is 28.00%. f. CSD is 59.00% equity-financed. g. CSD's 13.00-year, semi-annual pay, 6.03% coupon bond sells for $1,013.00. h. CSD's stock currently has a market value of $20.91 and Mr. Bensen believes the market estimates that dividends will grow at 3.95% forever. Next year's dividend is projected to be $1.54. Submit Answer format: Percentage Round to: 2 decimal places (Example: 9.24%, % sign required. Will accept decimal format rounded to 4 decimal places (ex: 0.0924))
Expert Answer:
Posted Date:
Students also viewed these finance questions
-
A geostationary satellite orbiting at a height 36,000km operates at 4GHz using a transmitter antenna that has a gain of 15dB. On earth the receiver antenna has a gain of 45dB. Calculate; (a) Free...
-
A sky diver of mass 60kg can slow herself to a constant speed of 90 km/h by adjusting her form. (a) What is the magnitude of the upward drag force on the sky diver? (b) If the drag force is equal to...
-
Use analytical methods and/or a graphing utility to identify the vertical asymptotes (if any) of the following functions. f(x) = 1/x sec x
-
What are the advantages and disadvantages of biometric security devices, such as fingerprint readers, in comparison with other security measures such as passwords and locked doors?
-
Diageo is a United Kingdom (UK) consumer products firm, best known in the United States for the following brand names: Smirnoff, Johnnie Walker, J&B, Gordons, Seagrams, and Guinness. Diageos 2007...
-
Check your understanding! It is influenza (flu) season and the CDC released a new rapid screening test for flu. A total of 54 people screened positive, of those 21 were true positives. A total of 49...
-
As an electron moves in the direction the electric fieldlines it is moving from low potential to high potential and gainingelectric potential energy. it is moving from low potential to high potential...
-
What are BOs that make up the reputation pattern?
-
Find out all such terms that mean exactly the same as trust and can they be used interchangeably?
-
How do we start with the identification of reputation and its related terms?
-
What is the trade-off of using this stable pattern?
-
A company that was using the EOQ formula to determine batch sizes realizes it has made a mistake and must recalculate those batch sizes using the EPQ formula. What will happen to batch sizes at this...
-
Suppose your Foundations of Finance TA Quirin offered the following deal in order to incentivize the performance of his class on the final exam: For every point you can raise your average in this...
-
What is the ideal number of children to have? This question was asked on the Sullivan Statistics Survey I. Draw a dot plot of the variable Children from theSullivanStatsSurveyI data set at...
-
Explain the difference between primary and secondary markets.
-
How has the ownership of UK shares changed over the past 50 years?
-
What securities, other than shares, are traded on the London Stock Exchange?
Study smarter with the SolutionInn App