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 $2.48 million fully installed and has a 10 year life. It will be depreciated to a book value of $176,612.00 and sold for that amount in year 10. b. The Engineering Department spent $15,056.00 researching the various juicers. c. Portions of the plant floor have been redesigned to accommodate the juicer at a cost of $21,040.00 d. The PJX5 will reduce operating costs by $489,341.00 per year e CSD's marginal tax rate is 22 00% 1. CSD is 75.00% equity-financed g CSD's 14 00-year, semi-annual pay, 6.38% coupon bond sells for $1.045.00 h. CSD's stock currently has a market value of $21.80 and Mr. Bensen believes the market estimates that dividends will grow at 4 27% forever. Next year's dividend is projected to be $1.57 Answer format: Percent Submit

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 $2.48 million fully installed and has a 10 year life. It will be depreciated to a book value of $176,612.00 and sold for that amount in year 10. b. The Engineering Department spent $15,056.00 researching the various juicers. c. Portions of the plant floor have been redesigned to accommodate the juicer at a cost of $21,040.00 d. The PJX5 will reduce operating costs by $489,341.00 per year e CSD's marginal tax rate is 22 00% 1. CSD is 75.00% equity-financed g CSD's 14 00-year, semi-annual pay, 6.38% coupon bond sells for $1.045.00 h. CSD's stock currently has a market value of $21.80 and Mr. Bensen believes the market estimates that dividends will grow at 4 27% forever. Next year's dividend is projected to be $1.57 Answer format: Percent Submit

Principles of Accounting Volume 2

19th Edition

ISBN:9781947172609

Author:OpenStax

Publisher:OpenStax

Chapter11: Capital Budgeting Decisions

Section: Chapter Questions

Problem 2TP: Austins cell phone manufacturer wants to upgrade their product mix to encompass an exciting new...

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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 $1.90 million fully installed and has a 10 year life. It will be depreciated to a book value of $158,307.00 and sold for that amount in year 10. b. The Engineering Department spent $11,647.00 researching the various juicers. c. Portions of the plant floor have been redesigned to accommodate the juicer at a cost of $22,370.00. d. The PJX5 will reduce operating costs by $440,567.00 per year. e. CSD’s marginal tax rate is 31.00%. f. CSD is 72.00% equity-financed. g. CSD’s 19.00-year, semi-annual pay, 6.57% coupon bond sells for $1,000.00. h. CSD’s stock currently has a market value of $24.80 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 $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…
#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…
#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 $2.45 million fully installed and has a 10 year life. It will be depreciated 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 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? (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…
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…
#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…
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…
GSU Motor Works needs to select an assembly line for producing their new SUV. They have two options:• Option XYZ is a highly automated assembly line that has a large up-front cost but low maintenancecost over the years. This option will cost $114 million today with a yearly operating cost of $40million. The assembly line will last for 6 years and be sold for $48 million in 6 years.• Option GHI is a cheaper alternative with less technology, a longer life, but higher operating costs.This option will cost $168 million today with an annual operating cost of $32 million. Thisassembly line will last for 10 years and be sold for $23 million in 10 years.The firm’s cost of capital is 16%. Assume a tax rate of zero percent. The equivalent annual cost (EAC) for Option XYZ is $_______ million.The equivalent annual cost (EAC) for Option GHI is $_______ million.
Ruff Motors needs to select an assembly line for producing their new SUV. They have two options:• Option A is a highly automated assembly line that has a large up-front cost but low maintenancecost over the years. This option will cost $8 million today with a yearly operating cost of $2 million.The assembly line will last for 5 years and be sold for $5 million in 5 years.• Option B is a cheaper alternative with less technology, a longer life, but higher operating costs.This option will cost $7 million today with an annual operating cost of $2.5 million. This assemblyline will last for 8 years and be sold for $1 million in 8 years.The firm’s cost of capital is 12%. Assume a tax rate of zero percent.The equivalent annual cost (EAC) for Option A is $_______ million.The equivalent annual cost (EAC) for Option B is $_______ million.
Austins cell phone manufacturer wants to upgrade their product mix to encompass an exciting new feature on their cell phone. This would require a new high-tech machine. You are excited about his new project and are recommending the purchase to your board of directors. Here is the information you have compiled in order to complete this recommendation: According to the information, the project will last 10 years and require an initial investment of $800,000, depreciated with straight-line over the life of the project until the final value is zero. The firms tax rate is 30% and the required rate of return is 12%. You believe that the variable cost and sales volume may be as much as 10% higher or lower than the initial estimate. Your boss understands the risks but asks you to explain the alternatives in a brief memo to the board, Write a memo to the Board of Directors objectively weighing out the pros and cons of this project and make your recommendation(s).