Question: Someone did a wrong answer that I posted last time, please fix it correctly. Thanks Caspian Sea Drinks is considering the purchase of a plum

Someone did a wrong answer that I posted last time, please fix it correctly. Thanks
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 $2.44 million fully installed and has a 10 year life. It will be depreciated to a book value of $155,995.00 and sold for that amount in year 10 . b. The Engineering Department spent $28,906.00 researching the various juicers. c. Portions of the plant floor have been redesigned to accommodate the juicer at a cost of $19,908.00. d. The PJX5 will reduce operating costs by $423,559.00 per year. e. CSD's marginal tax rate is 32.00%. f. CSD is 59.00% equity-financed. g. CSD's 12.00-year, semi-annual pay, 5.99\% coupon bond sells for $981.00. h. CSD's stock currently has a market value of $21.64 and Mr. Bensen believes the market estimates that dividends will grow at 3.54% forever. Next year's dividend is projected to be $1.69. 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) )
Step by Step Solution
There are 3 Steps involved in it
Get step-by-step solutions from verified subject matter experts
