Question

In: Finance

1.Caspian Sea Drinks is considering buying the J-Mix 2000. It will allow them to make and...

1.Caspian Sea Drinks is considering buying the J-Mix 2000. It will allow them to make and sell more product. The machine cost $1.72 million and create incremental cash flows of $563,361.00 each year for the next five years. The cost of capital is 9.95%. What is the net present value of the J-Mix 2000?

2.Caspian Sea Drinks is considering buying the J-Mix 2000. It will allow them to make and sell more product. The machine cost $1.72 million and create incremental cash flows of $566,982.00 each year for the next five years. The cost of capital is 8.44%. What is the internal rate of return for the J-Mix 2000?

3.Caspian Sea Drinks is considering buying the J-Mix 2000. It will allow them to make and sell more product. The machine cost $1.73 million and create incremental cash flows of $500,066.00 each year for the next five years. The cost of capital is 10.74%. What is the profitability index for the J-Mix 2000?

Solutions

Expert Solution

1. NPV = $418,312

2. IRR = 19.35%

3. Profitability Index = 1.0753 times

Excel Formuals and results are given below:

jeff jeffy answered 1 year ago
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