Pappys Potato has come up with a new product, the Potato Pet (they are freeze-dried to last longer).

Pappys paid $120,000 for a marketing survey to determine the viability of the product.

It is felt that Potato Pet will generate sales of $915,000 per year.

The fixed costs associated with this will be $235,000 per year, and variable costs will amount to 20 percent of sales.

The equipment necessary for production of the Potato Pet will cost $890,000 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. Pappys has a tax rate of 23 percent and a required return of 13 percent.

Calculate the payback period, NPV, and IRR . excel solution