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Please help me out thank you Pappy's Potato has come up with a new product, the Potato Pet (they are freeze-drled to last longer). After
Please help me out thank you
Pappy's Potato has come up with a new product, the Potato Pet (they are freeze-drled to last longer). After a careful marketing survey, It estimates that Potato Pet will generate sales of $840,000 per year. The fixed costs assoclated with thls will be $206,000 per year, and varlable costs will amount to 18 percent of sales. The equipment necessary for the production of the Potato Pet will cost $860,000 and will be depreclated In a stralght-llne manner for the four years of the product life (as with all fads, it is felt the sales will end quickly because of intensive compettion). This is the only Inttal cost for the production. Pappy's has a tax rate of 21 percent and a required return of 13 percent Prepare the Pro Forma FInanclal Statement about the project (namely, the annual earnings). You only need to calculate for the first year, the other three years will be the same. (3') t. Calculate the TIme 0 cash flow for this project (I.e., what Is the Initlal Investment for the Potato Pet project). (1') Note: A negatlve answer should be Indlcated by a minus sign. Do not round Intermedlate calculations and round your answer to the nearest whole number, e.g., 32 . Calculate the annual free cash flow for this project (There is no net working capital and salvage value for this project). (4') Note: Do not round Intermedlate calculatlons and round your answer to the nearest whole number, e.g., 32 . Calculate the payback perlod for this project. (1') Note: Do not round Intermedlate calculations and round your answer to 2 decimal places, e.g., 32.16. Calculate the NPV for this project. (1') Note: Do not round Intermedlate calculatlons and round your answer to 2 decimal places, e.g., 32.16 . Calculate the IRR for this project. (1') Note: Do not round Intermedlate calculations and enter your answer as a percent rounded to 2 decimal places, e.g., 32.16Step by Step Solution
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