What is the IRR of the PJX5?
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
a. The PJX5 will cost $1.97 million fully installed and has a 10 year life. It will be
b. The Engineering Department spent $49,587.00 researching the various juicers.
c. Portions of the plant floor have been redesigned to accommodate the juicer at a cost of $15,509.00.
d. The PJX5 will reduce operating costs by $430,356.00 per year.
e. CSD’s marginal tax rate is 26.00%.
f. CSD is 66.00% equity-financed.
g. CSD’s 19.00-year, semi-annual pay, 5.73% coupon bond sells for $1,031.00.
h. CSD’s stock currently has a market value of $20.05 and Mr. Bensen believes the market estimates that dividends will grow at 2.09% forever. Next year’s dividend is projected to be $1.62.
Trending now
This is a popular solution!
Step by step
Solved in 2 steps with 1 images
