Monday
March 30, 2015

Homework Help: Finance

Posted by Marie on Thursday, May 6, 2010 at 12:29pm.

Aunt Sally's Food Inc. is considering expansion. Sally has paid $100,000 for a marketing study to assist in the potential valuation. The study indicates that the new product will have sales of $1,500,000 per year each year for the next 6 years. However, existing product line sales will be adversely affected by about $200,000 per year. Equipment will cost $1,100,000 and will be depreciated on the straight-line method with no salvage value at the end of 6 years. Annual fixed costs are $160,000 per year and variable costs are 60% of annual sales. Also, initial working capital outlay of $150,000 will be required which will be recaptured at the end of the 6 years. Sally's tax rate is 35%. The firm requires an 18% return. Sally also requires a 25% after tax return on an accounting basis.

I NEED TO FIND 1)NET PRESENT VALUE, 2) INTERNAL RATE OF RETURN AND 3) AVERAGE ACCOUNTING RETURN

Answer this Question

First Name:
School Subject:
Answer:

Related Questions

College Finance - Aunt Sally's Food Inc. is considering expansion. Sally has ...
finance - Aunt Sallys foods is a full line producer of ready to use jarred food...
finance - One yaer fom now, how much value creation is expected from the ...
accounting - how would the table of analysis be set up with these transactions: ...
MBA Finance - Sally has won the grand prize in a lottery and must choose between...
Finance - What is the projects initial outlay? Should the project be accepted ...
finance - Texas Wildcatters Inc. (TWI) is in the business of finding and ...
Taxation - "Sally W. Emanual had the following dividends and interest during the...
finance - I need help bad. You have been running your small business, Craft’s ...
Finance - Winnebagel Corp. currently sells 33,000 motor homes per year at $49,...

Members