Caspian Sea Drinks is considering the production of a diet drink. The expansion of the plant...
Fantastic news! We've Found the answer you've been seeking!
Question:
Transcribed Image Text:
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 $24.00 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 $1.29 million at the beginning of the project and will be recovered at the end. The new diet drink will produce revenues of $8.89 million per year and cost $1.78 million per year over the 10-year life of the project. Marketing estimates 13.00% of the buyers of the diet drink will be people who will switch from the regular drink. The marginal tax rate is 29.00%. The WACC is 13.00%. Find the IRR (internal rate of return). Submit 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)) 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 $24.00 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 $1.29 million at the beginning of the project and will be recovered at the end. The new diet drink will produce revenues of $8.89 million per year and cost $1.78 million per year over the 10-year life of the project. Marketing estimates 13.00% of the buyers of the diet drink will be people who will switch from the regular drink. The marginal tax rate is 29.00%. The WACC is 13.00%. Find the IRR (internal rate of return). Submit 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))
Expert Answer:
Posted Date:
Students also viewed these finance questions
-
Perform the indicated operations. Let k be a natural number. a. (-2) c. (-2)4 e. Is (-2)2+ positive or negative? b. (-2) d. (-2)5
-
An LTI system has impulse response h[n] = 5 (1/2) n u[n]. Use the Fourier transform to find the output of this system when the input is x[n] = (1/3) n u[n].
-
What are the functions of a form control unit? Why is forms control important in large organizations?
-
Identifying basis for distribution of service department costs What would be the appropriate basis for distributing the costs of each of the following service departments to the user departments? a....
-
The December 31, 2014 statement of net assets of Mosholu Medical Center, a major urban hospital and research center, is presented below. The following transactions and events occurred in 2015: 1....
-
\f
-
From the information given, find the quadrant in which the terminal point determined by t lies. Input I, II, III, or IV. (a) sin(t) 0 and cos(t) 0 and cos(t) > 0, quadrant (d) sin(t) 0, quadrant
-
The preceding paragraph is an illustration of a sample that was taken from the minutes of a meeting that took place in HEWTO. The purpose of the gathering is to talk about Derek, who expressed...
-
Discuss the two categories of unmanned aircraft. Briefly describe the differences between sensors and payload. Differences between Active and Passive Sensing Differences between Remote and In Situ...
-
Data for the past two years for J&J Corp. are For 2019 units produced were 10,000 and the overhead applied per unit is P15. Actual FOH Variable; 95,000 and Fixed 50,000. Estimated fixed overhead...
-
Use the Black-Scholes option pricing model to price a one-year at the money call option on a stock that is trading at $50 per share, Rf is 5%, annual volatility is 25%. REMEMBER TO USE THE NORMAL...
-
What are the three types of heuristics we depend on to make quick decisions? Which is inherently bad, heuristics, biases, or both? Give one example of a bias coming from affect heuristic. What are...
-
ue tipo de organizacion como por tipo de producto . tipo de mercados , tipos de clientes , por funcion de ventas u organizacion vertical debo de elegir si quiero abrir una empresa de telefonia...
-
Create a data model for one of the processes in the end-of-chapter Exercises for Chapter 4. Explain how you would balance the data model and process model.
-
Graph F. \(a ightarrow b ightarrow e ightarrow c ightarrow b ightarrow d ightarrow c ightarrow a\) Use the graphs from the given figures to determine whether the sequence of vertices in the given...
-
The following accounts are applicable to Walters Chimney Sweeps, Inc.: 1. Cash 8. Common Stock 2. Accounts Receivable 9. Retained Earnings 3. Supplies 10. Dividends 4. Prepaid Insurance 11. Service...
-
Bob Lutz opened a secretarial school called Best Secretarial Training, Inc. a. Lutz contributed the following assets to the business in exchange for 13,600 shares of $1 par value common stock: Cash...
Study smarter with the SolutionInn App