Calculate the npv and irr for this project
Course:- Financial Management
Reference No.:- EM13942920

Assignment Help
Assignment Help >> Financial Management

Pappy’s Potato has come up with a new product, the Potato Pet (they are freeze-dried to last longer). Pappy’s paid $126,000 for a marketing survey to determine the viability of the product. It is felt that Potato Pet will generate sales of $581,000 per year. The fixed costs associated with this will be $185,000 per year, and variable costs will amount to 21 percent of sales. The equipment necessary for production of the Potato Pet will cost $632,000 and will be depreciated in a straight-line 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 is in a 30 percent tax bracket and has a required return of 15 percent.

Requirement 1: Calculate the payback period for this project. (Do not round intermediate calculations. Round your answer to 2 decimal places (e.g., 32.16).)

Payback period years

Requirement 2: Calculate the NPV for this project. (Do not round intermediate calculations. Round your answer to 2 decimal places (e.g., 32.16).)


Requirement 3: Calculate the IRR for this project. (Do not round intermediate calculations. Enter your answer as a percentage rounded to 2 decimal places (e.g., 32.16).)


Put your comment

Ask Question & Get Answers from Experts
Browse some more (Financial Management) Materials
The Claus Christmas Tree Company must order Christmas trees for the upcoming season. They order trees that are fairly uniform in size and in species. What would be the entry i
Prepare a paper that addresses the political and business risks and the rewards associated with global business operations. Include a discussion of the impact of monetary exch
A project has an initial cost of $8,700 and produces cash inflows of $2,600, $5,000, and $1,600 over the next three years, respectively. What is the discounted payback period
Thornley Machines is considering a 3-year project with an initial cost of $690,000. The project will not directly produce any sales but will reduce operating costs by $405,000
A $10,000, 8%(2) bond that matures at par on 6/1/20 is sold on 11/12/13 to a man requiring 10%(4) on his money. Find the quoted and purchase price when day counting basis is 3
The stock of Pizza Hot, Inc., a Mexican pizza chain, has an estimated beta of 1.5. Calculate the required rate of return on Pizza Hot's stock if the SML is estimated as give
Consider two streams of cash flows, A and B. Stream A’s first cash flow is $8,900 and is received three years from today. Future cash flows in Stream A grow by 4 percent in pe
Leverage can reduce the degree of managerial entrenchment because managers are more likely to be fired when a firm faces financial distress. When a firm is highly levered, cre