Harry's Seafood is considering the addition of a fish hatchery. Construction of the facility is estimated...

 

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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.

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