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 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 x Your answer is incorrect. Try again. 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 850 8506.9 LINK TO TEXT LINK TEXT 8506.90 8507.59 8507.60 X Your answer is incorrect. Try again, 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 x 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 5.97 J% LINK TO TEXT LINK TO TEXT LINK TO TEXT