#1Caspian Sea Drinks is considering the purchase of a plum juicer - the PJX5. There is noplanned increase in production. The PJX5 will reduce costs by squeezing more juice fromeach plum and doing so in a more efficient manner. Mr. Bensen gave Derek the followinginformation. What is the NPV of the PJX5?a. The PJX5 will cost $2.45 million fully installed and has a 10 year life. It will bedepreciated to a book value of $267,003.00 and sold for that amount in year 10.b. The Engineering Department spent $30,417.00 researching the various juicers.c. Portions of the plant floor have been redesigned to accommodate the juicer at a cost of$22,769.00.d. The PJX5 will reduce operating costs by $451,005.00 per year.e. CSD's marginal tax rate is 23.00%.f. CSD is 61.00% equity-financed.g. CSD's 13.00-year, semi-annual pay, 5.00% coupon bond sells for $978.00.h. CSD's stock currently has a market value of $20.16 and Mr. Bensen believes the marketestimates that dividends will grow at 2.58% forever. Next year's dividend is projected to be$1.71.Submit

Given information:a. Initial Cost of PJX5 = $2.45 millionb. Depreciated Book Value in Year 10 =…

Answered: #1 Caspian Sea Drinks is considering…

Essentials Of Investments

11th Edition

ISBN:9781260013924

Author:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.

Publisher:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.

Chapter1: Investments: Background And Issues

Section: Chapter Questions

Problem 1PS

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#39 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 $2.32 million fully installed and has a 10 year life. It will be depreciated to a book value of $223,927.00 and sold for that amount in year 10. b. The Engineering Department spent $29,992.00 researching the various juicers. c. Portions of the plant floor have been redesigned to accommodate the juicer at a cost of $20,688.00. d. The PJX5 will reduce operating costs by $481,420.00 per year. e. CSD's marginal tax rate is 36.00%. f. CSD is 67.00% equity inanced. g. CSD's 10.00-year, semi-annual pay, 5.05% coupon bond sells for $1,026.00. h. CSD's stock currently has a market value of $23.65 and Mr. Bensen believes the market estimates that dividends will grow at…
#1 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 $1.83 million fully installed and has a 10 year life. It will be depreciated to a book value of $164,562.00 and sold for that amount in year 10. b. The Engineering Department spent $26,999.00 researching the various juicers. c. Portions of the plant floor have been redesigned to accommodate the juicer at a cost of $15,963.00. d. The PJX5 will reduce operating costs by $316,008.00 per year. e. CSD’s marginal tax rate is 36.00%. f. CSD is 59.00% equity-financed. g. CSD’s 20.00-year, semi-annual pay, 5.99% coupon bond sells for $1,013.00. h. CSD’s stock currently has a market value of $21.74 and Mr. Bensen believes the market estimates that dividends will grow…
#2 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 $1.76 million fully installed and has a 10 year life. It will be depreciated to a book value of $119,465.00 and sold for that amount in year 10. b. The Engineering Department spent $16,973.00 researching the various juicers. c. Portions of the plant floor have been redesigned to accommodate the juicer at a cost of $19,208.00. d. The PJX5 will reduce operating costs by $343,070.00 per year. e. CSD’s marginal tax rate is 24.00%. f. CSD is 65.00% equity-financed. g. CSD’s 19.00-year, semi-annual pay, 6.11% coupon bond sells for $976.00. h. CSD’s stock currently has a market value of $20.64 and Mr. Bensen believes the market estimates that dividends will grow…
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 $1.58 million fully installed and has a 10 year life. It will be depreciated to a book value of $107,984.00 and sold for that amount in year 10. b. The Engineering Department spent $30, 114.00 researching the various juicers. c. Portions of the plant floor have been redesigned to accommodate the juicer at a cost of $18,576.00. d. The PJX5 will reduce operating costs by $ 310,028.00 per year. e. CSD's marginal tax rate is 20.00%. f. CSD is 66.00% equity - financed. g. CSD's 14.00-year, semi-annual pay, 6.84% coupon bond sells for $1,032.00. h. CSD's stock currently has a market value of $22.92 and Mr. Bensen believes the market estimates that dividends will grow at…
Caspian Sea Drinks is considering the purchase of a plum juicer - the PJX5. There is no planned incroase 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 Derok the following information. What is the IRR of the PJX5? #2 a. The PJX5 will cost $1.66 million fully instaled and has a 10 year life. It wll be depreciated to a book value of $257,124.00 and sold for that amount in year 10. b. The Engineering Department spent $48,616.00 researching the various juicers. a. Portions of the plant floor have been redesigned to accommodate the juicer at a cost of $18,897.00. d. The PJXS will reduce operating costs by $496,802.00 per yoar. 0. CSD's marginal tax rate is 31.00%. 1. CSD is 58.00% equity-financed. 9. CSD» 12.00-yoar, semi-annual pay, 6.63% coupon bond sells for $1,038.00. h. CSD's stock currently has a market value of $23.50 and Mr. Bensen believes the market estimates that dividends will grow at…
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 $1.67 million fully installed and has a 10 year life. It will be depreciated to a book value of $129,345.00 and sold for that amount in year 10. b. The Engineering Department spent $44,705.00 researching the various juicers. c. Portions of the plant floor have been redesigned to accommodate the juicer at a cost of $19,445.00. d. The PJX5 will reduce operating costs by $344,180.00 per year. e. CSD’s marginal tax rate is 27.00%. f. CSD is 64.00% equity-financed. g. CSD’s 19.00-year, semi-annual pay, 5.27% coupon bond sells for $1,029.00. h. CSD’s stock currently has a market value of $20.90 and Mr. Bensen believes the market estimates that dividends will grow at…
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 $2.46 million fully installed and has a 10 year life. It will be depreciated to a book value of $197,632.00 and sold for that amount in year 10. b. The Engineering Department spent $29,074.00 researching the various juicers. c. Portions of the plant floor have been redesigned to accommodate the juicer at a cost of $15,768.00. d. The PJX5 will reduce operating costs by $448,114.00 per year. e. CSD’s marginal tax rate is 21.00%. f. CSD is 60.00% equity-financed. g. CSD’s 10.00-year, semi-annual pay, 6.16% coupon bond sells for $1,014.00. h. CSD’s stock currently has a market value of $23.47 and Mr. Bensen believes the market estimates that dividends will grow at…
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? (ROUND TO 2 DECIMAL PLACES.) a. The PJX5 will cost $1.83 million fully installed and has a 10 year life. It will be depreciated to a book value of $284,956.00 and sold for that amount in year 10. b. The Engineering Department spent $44,242.00 researching the various juicers. c. Portions of the plant floor have been redesigned to accommodate the juicer at a cost of $20,794.00. d. The PJX5 will reduce operating costs by $438,196.00 per year. e. CSD’s marginal tax rate is 27.00%. f. CSD is 63.00% equity-financed. g. CSD’s 16.00-year, semi-annual pay, 5.71% coupon bond sells for $958.00. h. CSD’s stock currently has a market value of $24.35 and Mr. Bensen believes the market estimates that…
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? (ROUND TO 2 DECIMAL PLACES.) a. The PJX5 will cost $1.79 million fully installed and has a 10 year life. It will be depreciated to a book value of $146,115.00 and sold for that amount in year 10. b. The Engineering Department spent $23,587.00 researching the various juicers. c. Portions of the plant floor have been redesigned to accommodate the juicer at a cost of $16,144.00. d. The PJX5 will reduce operating costs by $310,064.00 per year. e. CSD’s marginal tax rate is 30.00%. f. CSD is 62.00% equity-financed. g. CSD’s 13.00-year, semi-annual pay, 6.37% coupon bond sells for $1,010.00. h. CSD’s stock currently has a market value of $21.43 and Mr. Bensen believes the market estimates…
4. What is a Break-even Point and why do managers calculate it? 5. Branton Electric is considering the purchase of an entire cargo container filled with upgraded utility meters for $20,000. Branton can charge $50 for the installation of each upgraded meter, while the actual cost of the installation would be only $15. How many utility meter upgrades are necessary for Branton Electric to break even on this purchase? (Quick Start #16) 6. What are the advantages and disadvantages of using a conservative strategy of Capacity versus an Aggressive strategy?
M4 Engineering is considering an investment in one of two machines. The CNC machine will increase productivity from producing 150 airplane mounting clamps per hour to producing 290 per hour. The contribution margin per unit is $0.32 per clamp. Assume that any increased production of clamps can be sold. The second machine is an automatic packing machine. The packing machine will reduce packing labor cost. The labor cost saved is equivalent to $21 per hour. The CNC machine will cost $260,000, have an eight-year life, and will operate for 1,800 hours per year. The packing machine will cost $85,000, have an eight-year life, and will operate for 1,400 hours per year. M4 Engineering seeks a minimum rate of return of 15% on its investments. Calculate the NPV and PV index for both machines (the packing machine will have a higher PV index). Utilize the PV tables from chapter 11/ chapter 25 for your calculations. What machine should be purchased? Address both financial and non-financial reasons…
15. Project NPV (S6.3) A widget manufacturer currently produces 200,000 units a year. It buys widget lids from an Page 176 outside supplier at a price of $2 a lid. The plant manager believes that it would be cheaper to make these lids rather than buy them. Direct production costs are estimated to be only $1.50 a lid. The necessary machinery would cost $150,000 and would last 10 years. This investment could be written off immediately for tax purposes. The plant manager estimates that the operation would require additional working capital of $30,000 but argues that this sum can be ignored since it is recoverable at the end of the 10 years. If the company pays tax at a rate of 21% and the opportunity cost of capital is 15%, would you support the plant manager's proposal? State clearly any additional assumptions that you need to make.

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