You are considering a new product launch. The project will cost $680,000, have a four-year life, and have no salvage value; depreciation is straight-line to zero. Sales are projected at 100 units per year, price per unit will be $19,000, variable cost per unit will be $14,000, and fixed costs will be $150,000 per year. The required return on the project is 15%, and the relevant tax rate is 35%. Ignore the half-year rule for accounting for depreciation.

(iii) Payback period (in years)

(iv) Discounted payback period (in years))

(v)Internal Rate of Return (IRR in %)

(vi) Average Accounting Return (AAR in %)

Hint: Net Income = {[(Price - variable cost)*Quantity Sold] - Fixed Costs - Depreciation} * (1 - Tax rate)