XYZ Inc. has developedanewelectronicgameandcompiledthe following product information. Year Production Cost Promotion Cost Sales Revenue 0 $48,000 Nil Nil 1 $48,000 $64,000 Nil 2 $48,000 $96,000 $64,000 3 $48,000 $32,000 $256,000 4 $48,000 Nil $128,000 5 Nil Nil $32,000 Ifthecompanyrequiresareturnof16%oninvestments CalculatetheNPVoftheproject. CalculatetheROIoftheproject. Determinethepaybackperiodoftheproject. Which you go ahead with the project? Why/why not? Dough Drill Inc. normally expects a minimum rate of return of 12% on investments. Two projects are available but only one can be chosen. Project A requires an immediate investment of $4,000,000. In return revenue payments of $4,000,000 will be received after 4 years and $9,000,000 after nine years. Project B requires an investment of .,$4,000,000 now and another $2,000,000 at the start of the third year. In return revenue payments will be received in the amount of $1,500,000 per year for nine years. Calculate the NPV of both projects Calculate the ROI of both projects. Determine the payback period of both projects Which project would you choose? Why?

Survey of Accounting (Accounting I)

8th Edition

ISBN:9781305961883

Author:Carl Warren

Publisher:Carl Warren

Chapter12: Differential Analysis And Product Pricing

Section: Chapter Questions

Problem 12.16E: Product cost concept of product pricing Based on the data presented in Exercise 12-15, assume that...

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XYZ Inc. has developedanewelectronicgameandcompiledthe following product information.

Year	Production Cost	Promotion Cost	Sales Revenue
0	$48,000	Nil	Nil
1	$48,000	$64,000	Nil
2	$48,000	$96,000	$64,000
3	$48,000	$32,000	$256,000
4	$48,000	Nil	$128,000
5	Nil	Nil	$32,000

Ifthecompanyrequiresareturnof16%oninvestments

CalculatetheNPVoftheproject.

CalculatetheROIoftheproject.

Determinethepaybackperiodoftheproject.

Which you go ahead with the project? Why/why not?

Dough Drill Inc. normally expects a minimum rate of return of 12% on investments. Two projects are available but only one can be chosen. Project A requires an immediate investment of $4,000,000. In return revenue payments of $4,000,000 will be received after 4 years and

$9,000,000 after nine years. Project B requires an investment of

.,$4,000,000 now and another $2,000,000 at the start of the third year. In return revenue payments will be received in the amount of $1,500,000 per year for nine years.

Calculate the NPV of both projects

Calculate the ROI of both projects.

Determine the payback period of both projects

Which project would you choose? Why?

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