Reference no: EM132813398

Question - Sales of a product toy named Scooby estimated at 80,000 pieces annually with a rate of 6 per unit. Its variable manufacturing costs are 2.50 p u, with S&D and general expenses related to Scooby is 59,000 on annual basis. Its fixed manufacturing costs (excluding depreciation) at 45,000 on annual basis.

Investment made is at 350,000 with related to various molds & equipment. The equipment have a 3 year life with ending salvage value of 20,000 where SLM depreciation was followed. Rate of tax will be at 40%.

Required -

I. Estimated increase in annual level of net income from the planned manufacture and sale of Scooby toys.

II. Annual net cash flows which was expected from the project.

III. With the assumption of discounted annual rate of 15 percent (Round your "PV factors" to 3 decimal places, payback period to the nearest tenth of a year and the return on average investment to the nearest tenth of a percent. Round net present value to the nearest whole amount.) find out,

Payback period ______ years

Return in average ______ %

Net present value ______

Please provide correct answer.