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Consider two mutually exclusive new product launch projects that Nagano Golf is considering. Assume the discount rate for both products is 13 percent. Project A:
Consider two mutually exclusive new product launch projects that Nagano Golf is considering. Assume the discount rate for both products is 13 percent. Project A: Nagano NP-30. Professional clubs that will take an initial investment of $570,000 at Year O. For each of the next 5 years, (Years 1-5), sales will generate a consistent cash flow of $205,000 per year. Introduction of new product at Year 6 will terminate further cash flows from this project. Project B: Nagano NX-20. High-end amateur clubs that will take an initial investment of $400,000 at Year 0. Cash flow at Year 1 is $120,000. In each subsequent year, cash flow will grow at 10 percent per year. Introduction of new product at Year 6 will terminate further cash flows from this project Year NP-30 NX-20 400,000 1 2 3 4 5 570,000 205,000 205,000 205,000 205,000 205,000 120,000 132,000 145,200 159,720 175,692 Complete the following table: (Do not round intermediate calculations. Round your "PI" answers to 3 decimal places, e.g., 32.161, and other answers to 2 decimal places, e.g., 32.16. Enter your IRR answers as a percent.) NP-30 NX-20 Payback years years IRR % % PI NPV
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