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Caspian Sea Drinks is considering the purchase of a plum juicer - the PJX5. There...

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Finance

image 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 NPV of the PJX5? a. The PJX5 will cost $1.81 million fully installed and has a 10 year life. It will be depreciated to a book value of $256,511.00 and sold for that amount in year 10 . Attempts Remaining: Infinity b. The Engineering Department spent $46,245.00 researching the various juicers. c. Portions of the plant floor have been redesigned to accommodate the juicer at a cost of $22,422.00. d. The PJX5 will reduce operating costs by $422,137.00 per year. e. CSD's marginal tax rate is 27.00%. f. CSD is 67.00% equity-financed. g. CSD's 17.00-year, semi-annual pay, 5.70% coupon bond sells for $988.00. h. CSD's stock currently has a market value of $21.25 and Mr. Bensen believes the market estimates that dividends will grow at 3.55% forever. Next year's dividend is projected to be $1.59

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