Caspian Sea Drinks is considering the production of a diet drink. The expansion of the plant...

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Caspian Sea Drinks is considering the production of a diet drink. The expansion of the plant and the purchase of the equipmen

business finance

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Answer 1

Answer #1

depreciation = (cost - salvage value) / number of years

= (22,000,000 - 3,000,000) / 10

= 1,900,000

net revenues = (revenue - variable cost)*(1 - % of switching)

= (8,640,000 - 1,930,000)*(1 - 0.12)

= 5,904,800

IRR:

B18 fx IRR(B16:L16) B C D E F G H I J K L 1 Year OD 11 2 3 4 5 6 7 8 9 10 2 3 Initial cost |-22000000 4 net working capital - so IRR = 15.4264%

(formula for IRR can be seen in the formula bar)

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Answer 2

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