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can someone answer this question? Tembila Golf Resort has decided to sell a new line of golf clubs. The clubs will sell for RM825 per
can someone answer this question?
Tembila Golf Resort has decided to sell a new line of golf clubs. The clubs will sell for RM825 per set and have a variable cost of RM370 per set. The company has spent RM150,000 for a marketing study that determined the company will sell 7400 sets per year. The marketing study also determined that the company will lose sales of 890 sets per year of its high-priced clubs. The high-priced clubs sell at RM1.250 and have variable costs of RM630. The company will also increase sales of its cheap clubs by 1100 sets per year. The cheap clubs sell for RM375 and have variable costs of RM140 per set. The above three (3) products will be for sale for four (4) years. The fixed costs each year will be RM1,400,000. The company has also spent RM500,000 on research and development for the new clubs. The plant and equipment required will cost RM2,000,000 and will be depreciated on a straight-line basis based on 10 year grace period. The new clubs will also require an increase in net working capital of RM200,000 that will be returned at the end of the project. The tax rate is 40%, and the cost of capital is a. Calculate initial cost of investment. (5 marks) b. Show extract of income statement for the above company four (4) years. (10 marks) C. Calculate the NPV. (5 marks) d. Decide to proceed or not and whyStep by Step Solution
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