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...
-
Newton showed that the air resistance on a falling object with a circular cross section should be approximately r 2 v 2 , where = 1.2 kg/m 3 , the density of air. Find the terminal speed for a...
-
Introductory remarks: Some businesses record purchases at the net amount to be paid when the cash discount is taken. For example, merchandise is purchased for \($1,000.00\) with a 2% discount allowed...
-
Prepare budgeted balance sheet and statement of cash flows (Learning Objective 3) The Music Box has applied for a loan. First Central Bank has requested a budgeted balance sheet at June 30, 2009, and...
-
At the end of May, the sales journal of Mountain View appears as follows. Mountain View also recorded the return of defective merchandise with the following entry. Required 1. Open an accounts...
-
Problem number 12 In problems 7 - 18, calculate the first 6 terms (starting with n = 1) of each sequence and graph these terms. 7. { 1- 2} 8. 13 + 2 n 9 . n { 20 - 1 } 10 . In ( n ) n 11. { 3 + (-1)...
-
Chapter 4 Homework Problem 4-1 OverPriced Jeans, Inc. Revenue and Expense Accounts This problem is for the month of February for OverPriced Jeans (OPJ). You will be using the new Revenue and Expense...
-
Order Dopamine 5 to 10 mcg/kg/min for a client weighing 184 lb. Titrate dosage to maintain client's SBP > 110 mm Hg. Available: 400 mg/250 mL NS Develop a titration table to determine the flow rates.
-
What is the rate (dq = W m ) at which radiation leaves a specified area of 2 m and passes through an area of 6 m given the spectral intensity is 1.72 W m sr m-1, a solid angle change of 31, and...
-
Doug Baker bought Toronto Dominion stocks for $50 a share one year ago. He sold the stock a year later for $55.50 a share. What was John's capital gains yield?
-
At a local university, the academic dean has informed the chairperson of the economics department that she must schedule 8 different graduate classes and 18 different undergraduate classes....
-
Out of the 120 sample observations, if the first 110 samples were taken to regress the AR (1) model. Then, using the estimated model to predict the next 10 observations, the root mean squared error...
-
What type of statistical data would the Director of Health Information and the Utilization Manager use in their respective jobs? How would the data be best displayed and why?
-
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...
-
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