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Problem 9 - 2 2 Calculating Project Cash Flows and NPV [ LO 2 ] Pappy's Potato has come up with a new product, the
Problem Calculating Project Cash Flows and NPV LO
Pappy's Potato has come up with a new product, the Potato Pet they are freezedried to last longer Pappy's paid $ for a marketing survey to determine the viability of the product. It is felt that Potato Pet will generate sales of $ per year. The fixed costs associated with this will be $ per year, and variable costs will amount to percent of sales. The equipment necessary for production of the Potato Pet will cost $ and will be depreciated in a straightline 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 has a tax rate of percent and a required return of percent.
a Calculate the payback period for this project.
Note: Do not round intermediate calculations and round your answer to decimal places, eg
b Calculate the NPV for this project.
Note: Do not round intermediate calculations and round your answer to decimal places, eg
c Calculate the IRR for this project.
Note: Do not round intermediate calculations and enter your answer as a percent rounded to decimal places, eg
tablea Payback period,,yearsb NPVc IRR,,
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