Calculate the irr for the given project

Assignment Help Finance Basics

Reference no: EM132027286

Question: Pappy's Potato has come up with a new product, the Potato Pet (they are freeze-dried to last longer). Pappy's paid $129,000 for a marketing survey to determine the viability of the product. It is felt that Potato Pet will generate sales of $584,000 per year. The fixed costs associated with this will be $188,000 per year, and variable costs will amount to 18 percent of sales. The equipment necessary for production of the Potato Pet will cost $638,000 and will be depreciated in a straight-line manner for the four years of the product life (as with all fads, it is felt the sales will end quickly). This is the only initial cost for the production. Pappy's has a tax rate of 35 percent and a required return of 14 percent.

Calculate the payback period for this project. (Do not round intermediate calculations and round your answer to 2 decimal places, e.g., 32.16.)

Payback period years

Calculate the NPV for this project. (Do not round intermediate calculations and round your answer to 2 decimal places, e.g., 32.16.)

NPV $

Calculate the IRR for this project. (Do not round intermediate calculations and enter your answer as a percent rounded to 2 decimal places, e.g., 32.16.)

IRR %

Reference no: EM132027286

Questions Cloud

Compute the relative risk of the two firms : Integrativ; Leverage and Risk Firm R has sales of 100,000 units at $2.00 per unit, variable operating cost of $1.70 per unit, and fixed operating cost of $6,000

What is the net present value of investment opportunity : If similar investment opportunities are expected to pay an annual rate of return of 5%, what is the net present value (NPV) of this investment opportunity?

What is the cost of common equity : Palencia Paints Corporation has a target capital structure of 40% debt and 60% common equity, with no preferred stock. Its before-tax cost of debt is 9%.

What is the estimated value of the store : You estimate that, over the long-term, cash flows will grow at 5% per year because of inflation expectations. Based on this information

Calculate the irr for the given project : Pappy's Potato has come up with a new product, the Potato Pet (they are freeze-dried to last longer). Pappy's paid $129,000 for a marketing survey to determine.

Discuss about the compensation income : Paola exercised an incentive stock option on March 1, 2016. She acquired 2,000 shares of stock at an exercise price of $3 per share when the fair market value.

What is the real interest rate you expect to earn : What is the real interest rate you expect to earn on your deposit over the next year?

Calculate the operating breakeven point in units : Degree of operating leverage Grey Products has fixed operating costs of $380,000, variable operating costs of $16 per unit, and a selling price of $63.50.

How can governments balance the need : How can governments balance the need for economic development and improve living standards, and at the same time seek the health and well-being of their citizen

User Account

All Pages