Question: Please answer both and explain throughly!! if possible!! A O Caspian Sea Drinks is considering the production of a diet drink. The expansion of the
A O 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 $28.00 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 $1.25 million at the beginning of the project and will be recovered at the end. The new diet drink will produce revenues of 9.23 million per year and cost $1.52 million per year over the 10-year life of the project. Marketing estimates 17.00% of the buyers of the diet drink will be people who will switch from the regular drink. The marginal tax rate is 22.00%. The WACC is 13.00%. Find the NPV (net present value) Submit Answer format: Currency: Round to: 2 decimal places 4 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 $3.00 million, and sold for that amount in year 10. Net working capital will increase by $1.27 million at the beginning of the project and will be recovered at the end. The new diet drink will produce revenues of $8.98 million per year and cost $2,14 million per year over the 10-year life of the project Marketing estimates 14.00% of the buyers of the diet drink will be people who will switch from the regular drink. The marginal tax rate is 27.00%. 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 (ox: 0.092434))
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