Answered step by step
Verified Expert Solution
Link Copied!

Question

1 Approved Answer

Need help finding payback period and NPV. Question is in the attachment. Question 9 Pappy's Potato has come up with a new product, the Potato

Need help finding payback period and NPV. Question is in the attachment.

image text in transcribed Question 9 Pappy's Potato has come up with a new product, the Potato Pet (they are freeze-dried to last longer). Pappy's paid $127,000 for a marketing survey to determine the viability of the product. It is felt that Potato Pet will generate sales of $582,000 per year. The fixed costs associated with this will be $186,000 per year, and variable costs will amount to 22 percent of sales. The equipment necessary for production of the Potato Pet will cost $634,000 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 is in a 30 percent tax bracket and has a required return of 12 percent. Requirement 1: Calculate the payback period for this project. (Do not round intermediate calculations. Round your answer to 2 decimal places (e.g., 32.16).) Payback period 1.82 years Requirement 2: Calculate the NPV for this project. (Do not round intermediate calculations. Round your answer to 2 decimal places (e.g., 32.16).) NPV $ 80,724.19

Step by Step Solution

There are 3 Steps involved in it

Step: 1

blur-text-image

Get Instant Access to Expert-Tailored Solutions

See step-by-step solutions with expert insights and AI powered tools for academic success

Step: 2

blur-text-image

Step: 3

blur-text-image

Ace Your Homework with AI

Get the answers you need in no time with our AI-driven, step-by-step assistance

Get Started

Recommended Textbook for

Principles Of Finance

Authors: Besley, Scott Besley, Eugene F Brigham, Brigham

4th Edition

0324655886, 9780324655889

More Books

Students also viewed these Finance questions

Question

What do you mean by dual mode operation?

Answered: 1 week ago

Question

Explain the difference between `==` and `===` in JavaScript.

Answered: 1 week ago

Question

3. Im trying to point out what we need to do to make this happen

Answered: 1 week ago