Problem 13.50 Sheridan is considering introducing a new fad toy, Topico. The new product is expected to generate annual revenue of $523,000, with direct materials cost of $183,000, direct labour $156,000, and overhead cost of $105,000. In order to produce Topico, Sheridan will need to purchase new equipment costing $299,000. The equipment will be used for 5 years, as Sheridan expects that interest in the toy will be stopped by then. The equipment will have no residual value after 5 years. To insure a smooth operation, Sheridan expects that the project will increase working capital by $6,000 at the beginning, which will be recovered at the end of the five years. In addition, it will cost Sheridan $6,000 to remove the equipment and clean up the facility. Sheridan's policy is to accept investment projects that have a 3-year payback period. Sheridan's required rate of return is 8%. Your answer is correct. What is the payback period for this investment? (Round answer to 2 decimal places, e.g. 1.25.) Payback Period 3.94 years LINK TO TEXT LINK TO TEXT LINK TO TEXT Your answer is correct. What is the net present value for this investment? (Round entry to 2 decimal places, e.g. 5,275.64. Show a negative amount preceded by a minus sign e.g. -5,000.68 or (5,000.68). Use Time Value of Money Table values to 4 decimals, e.g. 0.5823.) Net present value 4423.3 LINK TO TEXT LINK TO TEXT LINK TO TEXT Your answer is correct Your answer is correct. What is the internal rate of return for this investment? (Round answer to 4 decimal places, e.g. 1.2564%.) Internal rate of return 8.5437 % LINK TO TEXT LINK TO TEXT LINK TO TEXT * Your answer is incorrect. Try again. What is the accrual accounting rate of return? (Round answer to 2 decimal places, e.g. 1.25%.) Accrual Accounting Rate of Return 5.47 % LINK TO TEXT LINK TO TEXT LINK TO TEXT Question Attempts: Unlimited