Question
In: Finance
Caspian Sea Drinks is considering the production of a diet drink. The expansion of the plant...
Caspian Sea Drinks is considering the production of a diet drink. The expansion of the plant and the purchase of the equipment necessary to produce the diet drink will cost $23.00 million. The plant and equipment will be depreciated over 10 years to a book value of $2.00 million, and sold for that amount in year 10. Net working capital will increase by $1.27 million at the beginning of the project and will be recovered at the end. The new diet drink will produce revenues of $8.84 million per year and cost $2.17 million per year over the 10-year life of the project. Marketing estimates 18.00% of the buyers of the diet drink will be people who will switch from the regular drink. The marginal tax rate is 26.00%. The WACC is 15.00%. Find the NPV (net present value).
Solutions
jeff jeffy answered 2 years agoRelated Solutions
Caspian Sea Drinks is considering the production of a diet drink. The expansion of the plant...
Caspian Sea Drinks is considering the production of a diet
drink. The expansion of the plant and the purchase of the equipment
necessary to produce the diet drink will cost $24.00 million. The
plant and equipment will be depreciated over 10 years to a book
value of $2.00 million, and sold for that amount in year 10. Net
working capital will increase by $1.49 million at the beginning of
the project and will be recovered at the end. The new...
Caspian Sea Drinks is considering the production of a diet drink. The expansion of the plant...
Caspian Sea Drinks is considering the production of a diet
drink. The expansion of the plant and the purchase of the equipment
necessary to produce the diet drink will cost $25.00 million. The
plant and equipment will be depreciated over 10 years to a book
value of $3.00 million, and sold for that amount in year 10. Net
working capital will increase by $1.45 million at the beginning of
the project and will be recovered at the end. The new...
Caspian Sea Drinks is considering the production of a diet drink. The expansion of the plant...
Caspian Sea Drinks is considering the production of a diet
drink. The expansion of the plant and the purchase of the equipment
necessary to produce the diet drink will cost $24.00 million. The
plant and equipment will be depreciated over 10 years to a book
value of $1.00 million, and sold for that amount in year 10. Net
working capital will increase by $1.13 million at the beginning of
the project and will be recovered at the end. The new...
Caspian Sea Drinks is considering the production of a diet drink. The expansion of the plant...
Caspian Sea Drinks is considering the production of a diet
drink. The expansion of the plant and the purchase of the equipment
necessary to produce the diet drink will cost $24.00 million. The
plant and equipment will be depreciated over 10 years to a book
value of $1.00 million, and sold for that amount in year 10. Net
working capital will increase by $1.36 million at the beginning of
the project and will be recovered at the end. The new...
Caspian Sea Drinks is considering the production of a diet drink. The expansion of the plant...
Caspian Sea Drinks is considering the production of a diet
drink. The expansion of the plant and the purchase of the equipment
necessary to produce the diet drink will cost $23.00 million. The
plant and equipment will be depreciated over 10 years to a book
value of $2.00 million, and sold for that amount in year 10. Net
working capital will increase by $1.20 million at the beginning of
the project and will be recovered at the end. The new...
Caspian Sea Drinks is considering the production of a diet drink. The expansion of the plant...
Caspian Sea Drinks is considering the production of a diet
drink. The expansion of the plant and the purchase of the equipment
necessary to produce the diet drink will cost $24.00 million. The
plant and equipment will be depreciated over 10 years to a book
value of $3.00 million, and sold for that amount in year 10. Net
working capital will increase by $1.35 million at the beginning of
the project and will be recovered at the end. The new...
Caspian Sea Drinks is considering the production of a diet drink. The expansion of the plant...
Caspian Sea Drinks is considering the production of a diet
drink. The expansion of the plant and the purchase of the equipment
necessary to produce the diet drink will cost $25.00 million. The
plant and equipment will be depreciated over 10 years to a book
value of $2.00 million, and sold for that amount in year 10. Net
working capital will increase by $1.23 million at the beginning of
the project and will be recovered at the end. The new...
Caspian Sea Drinks is considering the production of a diet drink. The expansion of the plant...
Caspian Sea Drinks is considering the production of a diet
drink. The expansion of the plant and the purchase of the equipment
necessary to produce the diet drink will cost $28.00 million. The
plant and equipment will be depreciated over 10 years to a book
value of $2.00 million, and sold for that amount in year 10. Net
working capital will increase by $1.31 million at the beginning of
the project and will be recovered at the end. The new...
Caspian Sea Drinks is considering the production of a diet drink. The expansion of the plant...
Caspian Sea Drinks is considering the production of a diet
drink. The expansion of the plant and the purchase of the equipment
necessary to produce the diet drink will cost $23.00 million. The
plant and equipment will be depreciated over 10 years to a book
value of $1.00 million, and sold for that amount in year 10. Net
working capital will increase by $1.33 million at the beginning of
the project and will be recovered at the end. The new...
Caspian Sea Drinks is considering the production of a diet drink. The expansion of the plant...
Caspian Sea Drinks is considering the production of a diet
drink. The expansion of the plant and the purchase of the equipment
necessary to produce the diet drink will cost $22.00 million. The
plant and equipment will be depreciated over 10 years to a book
value of $3.00 million, and sold for that amount in year 10. Net
working capital will increase by $1.34 million at the beginning of
the project and will be recovered at the end. The new...
ADVERTISEMENT
ADVERTISEMENT
Latest Questions
- Why is it okay to speculate on Currency?
- What is the budgeting cycle and master budget? Why should companies use a master budget?
- please i need to have good answers and easy to understand This exercise refers to the...
- (1 point) Find y as a function of t if y′′+25y=0, y(0)=4,y′(0)=6. y= ?
- What are the six steps of hypothesis testing? What does it mean if we reject the...
- Consider the following network of a project consisting of 7 activities with a scheduled project duration...
- In 1941, President Roosevelt spoke about the “four freedoms.” For many in the country, however, these...
ADVERTISEMENT