Pappy's potato has come up with a new product, the potato pet (they are freeze-dried to last longer.) Pappys paid $120,000 for a merkting survey to determine the viability of the product. it is felt that potato pet will generate sales of $915,000 per year. the fixed costs assocaited with this will be $235000 per year, and variable scosts will aount to 20 percent of sales. the equipment necessary for productionof the potato pet will cost $89000 and will be depricated 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. The tax rate is 23 percent, and the required return is 13 percent. Calculate the A. payback period, B. NPV, C. and IRR. Show work in excel, please. Thank you.
Pappy's potato has come up with a new product, the potato pet (they are freeze-dried to last longer.) Pappys paid $120,000 for a merkting survey to determine the viability of the product. it is felt that potato pet will generate sales of $915,000 per year. the fixed costs assocaited with this will be $235000 per year, and variable scosts will aount to 20 percent of sales. the equipment necessary for productionof the potato pet will cost $89000 and will be depricated 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. The tax rate is 23 percent, and the required return is 13 percent. Calculate the
A. payback period,
B. NPV,
C. and
Show work in excel, please. Thank you.
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