Question: Please get the answer correct, thank you so so much. Caspian Sea Drinks is considering the production of a diet drink. The expansion of the

 Please get the answer correct, thank you so so much. Caspian

Please get the answer correct, thank you so so much.

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 $27.00 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 $1.42 million at the beginning of the project and will be recovered at the end. The new diet drink will produce revenues of $9.30 million per year and cost $2.44 million per year over the 10 -year life of the project. Marketing estimates 18.00% 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 11.00%. Find the NPV (net present value). Answer format: Currency: Round to: 2 decimal places

Step by Step Solution

There are 3 Steps involved in it

1 Expert Approved Answer
Step: 1 Unlock blur-text-image
Question Has Been Solved by an Expert!

Get step-by-step solutions from verified subject matter experts

Step: 2 Unlock
Step: 3 Unlock

Students Have Also Explored These Related Finance Questions!