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

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Finance

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 $1.62 million fully installed and has a 10 year life. It will be depreciated to a book value of $176,727.00 and sold for that amount in year 10. b. The Engineering Department spent $48,848.00 researching the various juicers. c. Portions of the plant floor have been redesigned to accommodate the juicer at a cost of $24,926.00. d. The PJX5 will reduce operating costs by $391,180.00 per year. e. CSDs marginal tax rate is 22.00%. f. CSD is 63.00% equity-financed. g. CSDs 20.00-year, semi-annual pay, 6.55% coupon bond sells for $1,037.00. h. CSDs stock currently has a market value of $22.10 and Mr. Bensen believes the market estimates that dividends will grow at 4.12% forever. Next years dividend is projected to be $1.45

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