1. McGilla Golf has decided to introduce a new line of golf clubs, called the Pro Set. Each Prose set will sell for $ 750 and its variable cost of production is $ 330 per unit. The company spent $ 150,000 on a marketing study over the next 7 years in the market, which determined a potential sale of 51,000 Pro sets for the first year, while, for the remainder of the study horizon, growth was estimated at 5% on annual sales. In the same way, the study determined that the company will lose the sales of 11,000 sets of its golf clubs called Plus set, there is no indication that this number will increase, so the external consultants consider it appropriate to assume that the lost sales in this line will be constant. during the life of the project. Currently, Plus sets sell for $ 1,200 per unit and have variable costs of $ 650 for each. On the other hand, the company estimates that its positioning in the market for golf sets for amateur and semi-professional players due to the introduction of the Pro set will lead to an increase, as a collateral benefit, in the sales of its Basic sets, which are focused on players starting their foray into the sport, so its price is considerably lower than the rest of McGilla's product portfolio. Incremental sales in this economic market (Basic sets) are estimated at 9,500 units for the first year, with an increase of 10% in the following years. Basic sets sell for $ 420 and have variable costs of $ 190. The decision to introduce the new Pro line to the market will imply an increase in the annual fixed costs of the manufacturing plant of $ 8,100,000, it is considered that this amount will remain stable in the following years. Regarding the investment, the company estimates that it will require disbursements in plant infrastructure in the amount of 9,800,000 dollars, and a total of 12,600,000 dollars for the various equipment and machinery for manufacturing, handling and transportation. In the accounting part, the comptroller general established that the investment made in assets can be valued at the end of the project in a net amount 25% of its original amount, as a fair way to recover the project. Finally, it is relevant to remember that the company spent 2,500,000 dollars in research and development of Pro golf clubs during the last 3 years. If the company accepts the seven years of the marketing study as its appropriate project valuation horizon, as well as determines that its MARR is equal to 14% per year, develop the following points: i. Estimate the project's net cash flows in accordance with the original marketing study approach and the McGilla Company estimates.

ii. Based on the net cash flows, determine the following economic performance criteria: (a) Net Present Value (NPV) and (d) Internal Rate of Return (IRR)

iii. What advice can we offer the McGilla company regarding the introduction and launch of their new Pro set?