Question

Pappy’s Potato has come up with a new product, the Potato Pet (they are freeze-dried to...

Pappy’s Potato has come up with a new product, the Potato Pet (they are freeze-dried to last longer). Pappy’s paid $210,000 for a marketing survey to determine the viability of the product. It is felt that Potato Pet will generate sales of $925,000 per year. The fixed costs associated with this will be $240,000 per year, and variable costs will amount to 20 percent of sales. The equipment necessary for production of the Potato Pet will cost $1,030,000 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 has a tax rate of 23 percent and a required return of 14 percent.

a. Calculate the payback period for this project. (Do not round intermediate calculations and round your answer to 2 decimal places, e.g., 32.16.)
b. Calculate the NPV for this project. (Do not round intermediate calculations and round your answer to 2 decimal places, e.g., 32.16.)
c. Calculate the IRR for this project. (Do not round intermediate calculations and enter your answer as a percent rounded to 2 decimal places, e.g., 32.16.)

Homework Answers

Know the answer?
Your Answer:

Post as a guest

Your Name:

What's your source?

Earn Coins

Coins can be redeemed for fabulous gifts.

Not the answer you're looking for?
Ask your own homework help question
Similar Questions
Pappy’s Potato has come up with a new product, the Potato Pet (they are freeze-dried to...
Pappy’s Potato has come up with a new product, the Potato Pet (they are freeze-dried to last longer). Pappy’s paid $185,000 for a marketing survey to determine the viability of the product. It is felt that Potato Pet will generate sales of $900,000 per year. The fixed costs associated with this will be $230,000 per year, and variable costs will amount to 18 percent of sales. The equipment necessary for production of the Potato Pet will cost $980,000 and will...
Pappy’s Potato has come up with a new product, the Potato Pet (they are freeze-dried to...
Pappy’s Potato has come up with a new product, the Potato Pet (they are freeze-dried to last longer). Pappy’s paid $145,000 for a marketing survey to determine the viability of the product. It is felt that Potato Pet will generate sales of $860,000 per year. The fixed costs associated with this will be $214,000 per year, and variable costs will amount to 18 percent of sales. The equipment necessary for production of the Potato Pet will cost $900,000 and will...
Pappy’s Potato has come up with a new product, the Potato Pet (they are freeze-dried to...
Pappy’s Potato has come up with a new product, the Potato Pet (they are freeze-dried to last longer). Pappy’s paid $125,000 for a marketing survey to determine the viability of the product. It is felt that Potato Pet will generate sales of $580,000 per year. The fixed costs associated with this will be $184,000 per year, and variable costs will amount to 20 percent of sales. The equipment necessary for production of the Potato Pet will cost $630,000 and will...
Pappy’s Potato has come up with a new product, the Potato Pet (they are freeze-dried to...
Pappy’s Potato has come up with a new product, the Potato Pet (they are freeze-dried to last longer). Pappy’s paid $124,000 for a marketing survey to determine the viability of the product. It is felt that Potato Pet will generate sales of $579,000 per year. The fixed costs associated with this will be $183,000 per year, and variable costs will amount to 18 percent of sales. The equipment necessary for production of the Potato Pet will cost $628,000 and will...
oints Pappy’s Potato has come up with a new product, the Potato Pet (they are freeze-dried...
oints Pappy’s Potato has come up with a new product, the Potato Pet (they are freeze-dried to last longer). Pappy’s paid $137,000 for a marketing survey to determine the viability of the product. It is felt that Potato Pet will generate sales of $592,000 per year. The fixed costs associated with this will be $196,000 per year, and variable costs will amount to 22 percent of sales. The equipment necessary for production of the Potato Pet will cost $654,000 and...
Pappy’s Potato has come up with a new product, the Potato Pet (they are freeze-dried to...
Pappy’s Potato has come up with a new product, the Potato Pet (they are freeze-dried to last longer). Pappy’s paid $137,000 for a marketing survey to determine the viability of the product. It is felt that Potato Pet will generate sales of $592,000 per year. The fixed costs associated with this will be $196,000 per year, and variable costs will amount to 22 percent of sales. The equipment necessary for production of the Potato Pet will cost $654,000 and will...
Pappy’s Potato has come up with a new product, the Potato Pet (they are freeze-dried to...
Pappy’s Potato has come up with a new product, the Potato Pet (they are freeze-dried to last longer). Pappy’s paid $155,000 for a marketing survey to determine the viability of the product. It is felt that Potato Pet will generate sales of $870,000 per year. The fixed costs associated with this will be $218,000 per year, and variable costs will amount to 22 percent of sales. The equipment necessary for production of the Potato Pet will cost $920,000 and will...
Pappy's Potato has come up with a new product, the Potato Pet that they are considering...
Pappy's Potato has come up with a new product, the Potato Pet that they are considering launching. The company has determined they will need a fixed asset investment at the beginning of the project of $260,000. This asset will last for four years which is the life of the project. Also, they will need to have more net working capital (NWC) of which they have estmated an amount of $16,500 for this purpose. The NWC will be recovered when the...
You are considering a new product launch. The project will cost $982,000, have a four-year life,...
You are considering a new product launch. The project will cost $982,000, have a four-year life, and have no salvage value; depreciation is straight-line to zero. Sales are projected at 300 units per year; price per unit will be $19,200, variable cost per unit will be $15,700, and fixed costs will be $328,000 per year. The required return on the project is 12 percent, and the relevant tax rate is 40 percent. Based on your experience, you think the unit...
Allied Products, Inc., is considering a new product launch. The firm expects to have annual operating...
Allied Products, Inc., is considering a new product launch. The firm expects to have annual operating cash flow of $8.3 million for the next eight years. Allied Products uses a discount rate of 13 percent for new product launches. The initial investment is $38.3 million. Assume that the project has no salvage value at the end of its economic life. What is the NPV of the new product? (Enter your answer in dollars, not millions of dollars, e.g., 1,234,567. Do...
ADVERTISEMENT
Need Online Homework Help?

Get Answers For Free
Most questions answered within 1 hours.

Ask a Question
ADVERTISEMENT