Initial cost-salvage value

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Peggy's Peaches has developed a new product, the Bruise less Peach, which always stays peachy fresh. Peggy's paid 85,000 to a marketing firm to survey the bruise less peach market. The potential sales were estimated at $250,000 per year. New equipment will be necessary to carefully handle the peaches. It cost $200,000 and will have fixed costs of $70,000 per year, and variable costs will be 25% of sales. The new anti-bruise machine will be depreciated straight-line for the four years of it's life and is the only initial cost for the new "Peggy's Peaches, the UnBruised Ones." Peggy's pays 34% tac and has a required return of 8%. Calculate the NPV and IRR.

Depreciation= (Initial cost-Salvage Value)/years= Assume Salvage Value=0

Sales=

Variable Costs=

Fixed Costs

Depreciation=

EBIT=Sales-costs-dep=

Taxes=EBIT*tax rate =

Net Income=EBIT-taxes=

Reference no: EM13838607

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