Calculate the payback period for this project

Assignment Help Accounting Basics
Reference no: EM133062959

Question - Pappy's Potato has come up with a new product, the Potato Pet (they are freeze-dried to last longer}. Pappy's paid $170,000 for a marketing survey to determine the viability of the product. It is felt that Potato Pet will generate sales of $885,000 per year. The fixed costs associated with this will be $224,000 per year, and variable costs will amount to 20 percent of sales. The equipment necessary for production of the Potato Pet will cost $950,000 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 25 percent and a required return of 14 percent.

Required -

a. Calculate the payback period for this project.

b. Calculate the NPV for this project.

c. Calculate the IRR for this project.

Reference no: EM133062959

Questions Cloud

What is the projected net income : Variable costs are 39 percent of sales and fixed costs are $216,000; depreciation is $99,000. Assume a tax rate of 21 percent. What is the projected net income
Measure of economic activity : Gross Domestic Product was designed as a measure of economic activity, specifically a measure of national production. Despite this intent, GDP is widely interpr
Explain the court hierarchy in Australia : What is the legal tradition on which the Australian legal system is based and What is statute law and who makes it
Historical record of antitrust enforcement : According to the Federal Trade Commission, "Many mergers benefit competition and consumers by allowing firms to operate more efficiently. But some mergers chang
Calculate the payback period for this project : Pappy's paid $170,000 for a marketing survey to determine the viability of the product. Calculate the payback period for this project
Explain active balances and passive balances : Distinguish between active balances and passive balances and mention the main determinant of each
Price of a share of nelly stock : Nelly Enterprises will have earnings per share of 53.5 for the coming year. Nelly plans to retain all its earnings for the next four years.
Prepare an environmental cost analysis of the existing cost : Prepare an environmental cost analysis of the existing cost of $91,173, highlighting prevention, appraisal, and internal and external failure costs
Measure percentage changes : A bakery currently sells chocolate chip cookies at a price of $16/dozen. The marginal cost is $8/dozen. The cookies are becoming more popular with customers, an

Reviews

Write a Review

Accounting Basics Questions & Answers

  How much control does fed have over this longer real rate

Hubbard argues that the Fed can control the Fed funds rate, but the interest rate that is important for the economy is a longer-term real rate of interest.   How much control does the Fed have over this longer real rate?

  Coures:- fundamental accounting principles

Coures:- Fundamental Accounting Principles: - Explain the goals and uses of special journals.

  Accounting problems

Accounting problems,  Draw a detailed timeline incorporating the dividends, calculate    the exact Payback Period  b)   the discounted Payback Period. the IRR,  the NPV, the Profitability Index.

  Write a report on internal controls

Write a report on Internal Controls

  Prepare the bank reconciliation for company

Prepare the bank reconciliation for company.

  Cost-benefit analysis

Create a cost-benefit analysis to evaluate the project

  Theory of interest

Theory of Interest: NPV, IRR, Nominal and Real, Amortization, Sinking Fund, TWRR, DWRR

  Liquidity and profitability

Distinguish between liquidity and profitability.

  What is the expected risk premium on the portfolio

Your Corp, Inc. has a corporate tax rate of 35%. Please calculate their after tax cost of debt expressed as a percentage. Your Corp, Inc. has several outstanding bond issues all of which require semiannual interest payments.

  Simple interest and compound interest

Simple Interest, Compound interest, discount rate, force of interest, AV, PV

  Capm and venture capital

CAPM and Venture Capital

Free Assignment Quote

Assured A++ Grade

Get guaranteed satisfaction & time on delivery in every assignment order you paid with us! We ensure premium quality solution document along with free turntin report!

All rights reserved! Copyrights ©2019-2020 ExpertsMind IT Educational Pvt Ltd