A company that manufactures recreational pedal boats has approached Mike Cichanowski to ask if he would be interested in using Current Designs rotomold expertise and equipment to produce some of the pedalboat components. Mike is intrigued by the idea and thinks it would be an interesting way of complementing the present product line One of Mike's hesitations about the proposal is that the pedal boats are different shape than the kasks that Current Designs produces. As a result, the company would need to buy an additional rotomold even in order to produce the pedal boat components This project clearly involves risks, and Mike wants to make sure that the returna justify the risks in this case, since this is a new venture, Mike thinles that a 15% discount rate is appropriate to use to evaluate the project As an intern at Current Design, Mike has asked you to prepare an initial evaluation of this proposal. To aid in your analysis, he has provided the following information and assumptions 1 The new rotomoldoven will have a cost of $301.000, a salvage value of 50, and an 8-year useful life. Straight line depreciation will be used 2 The projected revenues, costs, and results for each of the years of this project are as follows Sales S204.800 Less Manufacturing costs $120.375 Depreciation 37.625 Shipping and administrative costs 22.000 180,000 Income before income to 24.800 Income tax expense 10,800 Net income 514.000 Click here to view PV table Your Answer Correct Answer Your answer correct Compute the annual rate of return. Round answer to 2 decimal places. 15.25 93 Annual rate of retum $ e Textbook and Media Attempts: 3 of 3 used Using multiple attempts has impacted your score (6) Your answer is correct. Compute the payback period. (Round answer to 2 decimal places, eg 15.25) Payback period 6.02 years eTextbook and Media Attempts: 2 of 3 used Using multiple attempts will impact your score, 596 score reduction after attempt 2 (c) Compute the net present value using a discount rate of 59. of the net present value is negotive, use either a negative sign preonding the nurnbereg 45 or parentheses eg (45). Round answer to decimal places eg. 125. For calculation purposes, use 5 decimal places as displayed in the factor table provided) $ Net present value Should the proposal be accepted using this discount rate? V the proposal e Textbook and Media Sava for Later Attempts of 3 used Submit Answer Using multiple attempts will impact your score 596 score reduction after attempt 2 (d) The parts of this question must be completed in order. This part will be available when you complete the part above
