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Caspian Sea Drinks is considering th purchase of a new water filtration system produced by Rube Goldberg Machines. This new equipment, the RGM-7000 will allow Caspian Sea

Caspian Sea Drinks is considering th purchase of a new water filtration system produced by Rube Goldberg Machines. This new equipment, the RGM-7000 will allow Caspian Sea

Essentials Of Investments
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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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 $3.86 million per year and increased operating costs of $680,594.00 per year. Caspian Sea Drinks' marginal tax rate is 32.00%. If Caspian Sea Drinks uses a 11.00% discount rate, then the net present value of the RGM-7000 is Submit Answer format: Currency: Round to: 2 decimal places.
Transcribed Image Text: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 $3.86 million per year and increased operating costs of $680,594.00 per year. Caspian Sea Drinks' marginal tax rate is 32.00%. If Caspian Sea Drinks uses a 11.00% discount rate, then the net present value of the RGM-7000 is Submit Answer format: Currency: Round to: 2 decimal places.
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