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Caspian Sea Drinks is considering the purchase of a new water filtration system produced by...

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Finance

Caspian Sea Drinks is considering the purchase of a new water filtration system produced by Rube Goldberg Machines. This new equipment, the RGM-7000, will allow Caspian Sea Drinks to expand production. It will cost $12.00 million fully installed and will be fully depreciated over a 20 year life, then removed for no cost. The RGM-7000 will result in additional revenues of $3.15 million per year and increased operating costs of $590,816.00 per year. Caspian Sea Drinks' marginal tax rate is 34.00%. If Caspian Sea Drinks uses a 10.00% discount rate, then the net present value of the RGM-7000 is _____.

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