Harry's Seafood is considering the addition of a fish hatchery. Construction of the facility is estimated...
Fantastic news! We've Found the answer you've been seeking!
Question:
Transcribed Image Text:
Harry's Seafood is considering the addition of a fish hatchery. Construction of the facility is estimated to cost $1,100,000 and will be depreciated over 10 years using the straight- line method. The hatchery is expected to have no estimated residual value. Harry's Seafood has a required rate of return of 12%. Incremental net income related to each year of the investment is as follows: a. b. C. d. Revenue Expenses: Material cost Labor Depreciation Other Income before taxes Income tax expense at 40% Net income $ 60,000 100,000 110,000 10,000 $450,000 280,000 170,000 68,000 $102,000 Determine the net present value of the investment. Should Harry's Seafood invest in the hatchery? Calculate the internal rate of return of the investment to the nearest ½ percent. Calculate the payback period of the investment. Calculate the accounting rate of return. Harry's Seafood is considering the addition of a fish hatchery. Construction of the facility is estimated to cost $1,100,000 and will be depreciated over 10 years using the straight- line method. The hatchery is expected to have no estimated residual value. Harry's Seafood has a required rate of return of 12%. Incremental net income related to each year of the investment is as follows: a. b. C. d. Revenue Expenses: Material cost Labor Depreciation Other Income before taxes Income tax expense at 40% Net income $ 60,000 100,000 110,000 10,000 $450,000 280,000 170,000 68,000 $102,000 Determine the net present value of the investment. Should Harry's Seafood invest in the hatchery? Calculate the internal rate of return of the investment to the nearest ½ percent. Calculate the payback period of the investment. Calculate the accounting rate of return.
Expert Answer:
Answer rating: 100% (QA)
a b C d The company should invest in the hatchery because the investment will generate a r... View the full answer
Related Book For
Managerial Economics Theory Applications and Cases
ISBN: 978-0393912777
8th edition
Authors: Bruce Allen, Keith Weigelt, Neil A. Doherty, Edwin Mansfield
Posted Date:
Students also viewed these general management questions
-
The Berwyn Company is considering the addition of a new product to its product line. The firm has plenty of excess manufacturing capacity to produce the new product, and its total fixed costs would...
-
A producer of pottery is considering the addition of a new plant to absorb the backlog of demand that now exists. The primary location being considered will have fixed costs of $ 9,200 per month and...
-
The FAF is considering the addition of baby GAAP for private companies. Take a position and argue why two GAAPs should or should not exist.
-
ABC Client Preliminary Analytics - PBC Trial Balance December 31, 2019 Scope: Performance Materiality $210,000 and 10% 12/31/19 Balance 12/31/18 Account Class Balance Variance * Varlance Cash...
-
Refer to the financial statements of The Home Depot in Appendix A at the end of this book, or download the annual report from the Cases section in the Connect library. 1. How much inventory does the...
-
Here are the errors associated with a particular forecast over the past 5 months, in chronological order: 5, 10, -15, 0, 8. In which month was the forecast perfectly accurate? In which month was the...
-
Explain the differences between a contingency fee agreement, flat fee agreement, and hourly rate agreement.
-
A carpenter quits his job at a furniture factory to open his own cabinetmaking business. In his first two years of operation, his sales average $100 000 per year and his operating costs for wood,...
-
Use the following Adjusted Trial Balance to prepare a Merchandising MULTI-STEP Income Statement for the Year Ended Dec 31, 2022. Asset, Liab, Rev, I/S or Account Description Debit Credit Exp, Other...
-
Martha has not made any taxable gifts in her past Check and complete the excel spreadsheet of total assets. ASSUME BENNY DIES ON DECEMBER 31, 2020. Prepare a Reconciliation of Gross Estate to the...
-
A bob of mass m, suspended by a string of length 1 is given a minimum velocity required to complete a full circle in the vertical plane. At the highest point, it collides elastically with another bob...
-
Is relative valuation a useful approach for estimating the value of new ventures? Why or why not? Under what circumstances would you be confident using relative valuation?
-
Which requires improvisation-business impact analysis or bricolage?
-
Is the dividend discount model a good shortcut for estimating the cost of equity for a new venture? Why or why not?
-
For social networking ventures, what kinds of indicators do you think might be useful at early stages to help assess the value of an opportunity?
-
Describe the process of estimating the appropriate market risk premium. Where can data be found for estimating the market risk premium?
-
Who does control the universities and institutions and when was established?
-
Establish identity. cos( + k) = (-1)k cos , k any integer
-
The McDermott Company estimates its average total cost to be $10 per unit of output when it produces 10,000 units, which it regards as 80% of capacity. Its goal is to earn 20% on its total...
-
Determine the first derivative of each of the following functions: a. Y = 3 + 10X + 5X2 b. Y = 2X(4 + X3) c. Y = 3X/(4 + X3) d. Y = 4X/(X 3)
-
GeeM has a sporty wheel package and a luxury interior package that it is considering offering to its auto buyers. GeeM has estimated that there are three consumer types (A, B, and C-all of equal...
-
The fly balls of spring loaded governor of Hartnell type running at 600 rpm have a radius of rotation of 80 mm with sleeve in mid-position and ball arms vertical. The ball arms and sleeve arms are of...
-
The height of Watt's governor is proportional to (a) speed (N) (b) \(\mathrm{N}^{2}\) (c) \(1 / \mathrm{N}\) (d) \(1 / \mathrm{N}^{2}\).
-
What is the main function of a governor? How does it differ from that of a flywheel?
Study smarter with the SolutionInn App