Calculating project cash flows and npv

Assignment Help Finance Basics
Reference no: EM131732423

Question: Calculating Project Cash Flows and NPV. Pappy's Potato has come up with a new product, the Potato Pet (they are freeze-dried to last longer). Pappy's paid $120,000 for a marketing survey to determine the viability of the product. It is felt that Potato Pet will generate sales of $815,000 per year. The fixed costs associated with this will be $196,000 per year, and variable costs will amount to 20 percent of sales. The equipment necessary for production of the Potato Pet will cost $865,000 and will be depreciated in a straight-line manner for the 4 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 40 percent and a required return of 13 percent. Calculate the payback period, NPV, and IRR.

Reference no: EM131732423

Questions Cloud

Calculate the base-case cash flow and npv : Calculate the base-case cash flow and NPV. What is the sensitivity of NPV to changes in the sales figure? Explain what your answer tells you about a 500-unit.
Discuss discharged with a prescription for penicillin : A client being discharged with a prescription for penicillin also takes probenecid. The nurse explains that probenecid
Examine the long-run determinants of both the level : Examine the long-run determinants of both the level and the growth rate of real GDP per person and the factors that determine the productivity of workers
Evaluate your effectiveness at meeting the program essential : Evaluate your effectiveness at meeting this program essential, and ponder the impact that this proficiency will have on your future.
Calculating project cash flows and npv : Calculating Project Cash Flows and NPV. Pappy's Potato has come up with a new product, the Potato Pet (they are freeze-dried to last longer).
Should the company buy and install the machine press : Cost-Cutting Proposals. CSM Machine Shop is considering a four-year project to improve its production efficiency. Buying a new machine press for $375,000.
Why is the lab test used to make the diagnosis of hemophilia : Why is the Aptt lab test used to make the diagnosis of hemophilia A. MUST USE intrinsic pathway AND extrinsic in explanation. why is the PT not used.
How sensitive is ocf to changes in quantity sold : Sensitivity Analysis. Consider a three-year project with the following information: initial fixed asset investment = $645,000; straight-line depreciation.
Define the history of pharmacy : Conduct a web search for important events that contributed to the history of pharmacy

Reviews

Write a Review

Finance Basics Questions & Answers

  What type of auto insurance is required in north carolina

Research and summarize what type of auto insurance is required in the state of North Carolina.  Andrew received notice from his auto insurer that it would not renew his auto insurance policy.

  The relative costs of different sources of capital

What might we expect to see in practice in the relative costs of different sources of capital?

  What is a reasonable price for a share of rah stock

RAH Inc. is not public ally traded, but the P/E ratios of its 4 closest competitors are 15, 15,3,15,7', and 16.5. RAH's current earnings per share are $ 1.50. They are expected to grow at 6% for the next few years. What is a reasonable price for a..

  Organization financial viability

Increased demand for health care services leads to an increasing need for health care organizations to be cost efficient. What are the factors that impact an organization's financial viability?

  Which investment should sammy choose

Sammy is endowed with $10,000,000 and is considering whether to invest in a business venture. Perfect capital markets, interest rate of 6%.

  Calculate the best route for the graduates housing situation

Read the HBR case study Time Value of Money: The Buy Versus Rent Decision and calculate the best route for the graduate's housing situation, developing your understanding of time value of money concepts and calculations.

  Compute the daily loss-gain

Compute the daily loss/gain, and cumulative loss/gain for each date.

  What would the equal monthly payments be

The terms of the loan require that your friend make 12 equal end-of-month payments each year for 6 years, and then an additional final (balloon) payment of $5,500 at the end of the last month. What would the equal monthly payments be?

  Calculate the given ratios

A hotel provided the following information for Year 0008: The cash flow from operating activities was $178,200, average current liabilities were $58,800.

  Draw a payoff diagram showing the value

Draw a payoff diagram showing the value of the call at expiration as a function of the stock price at expiration.

  What rate of growth must the firm experience

(Growth rate in stock dividends and the cost of equity) In March of this past year, Manchester Electric (an electrical supply company operating throughout.

  What is your estimate of carpettos cost of common equity

Assuming you have equal confidence in the inputs used for the three approaches, what is your estimate of Carpetto's cost of common equity? Round your answer to two decimal places.

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