Answered step by step
Verified Expert Solution
Link Copied!

Question

1 Approved Answer

help? please?? McGilla Golf has decided to sell a new line of golf clubs. The dubs will sell for $742 per set and have a

image text in transcribed

help? please??

McGilla Golf has decided to sell a new line of golf clubs. The dubs will sell for $742 per set and have a variable cost of $372 per set. The company has spent $162,000 for a marketing study that determined the company will sell 76, 200 sets per year for seven years. The marketing study also determined that the company will lose sales of 9, 700 sets per year of its high-priced clubs. The high-priced clubs sell at $1, 320 and have variable costs of $660. The company will also increase sales of its cheap clubs by 12, 200 sets per year. The cheap dubs sell for $352 and have variable costs of $137 per set. The fixed costs each year will be $11, 320,000. The company has also spent $1, 120.000 on research and development for the new clubs. The plant and equipment required will cost $25, 340,000 and will be depreciated on a straight-line basis. The new dubs will also require an increase in net working capital of $1, 620,000 that will be returned at the end of the project. The tax rate is 40 percent, and the cost of capital is 16 percent. Required: Calculate the Time 0 cash flow. (Enter your answer as a positive value. Do not round intermediate calculations. Round your answer to the nearest whole number (e.g., 32).) Time 0 cash flow Required: Construct the pro forma income statement. (Do not round intermediate calculations. Round your answers to the nearest whole number (e.g., 32).) Calculate the OCF. (Do not round intermediate calculations. Round your answers to the nearest whole number (e.g., 32).) OCF Calculate the payback period, the NPV. and the IRR. (Do not round intermediate calculations. Round your answers to 2 decimal places (e.g., 32.16).)

Step by Step Solution

There are 3 Steps involved in it

Step: 1

blur-text-image

Get Instant Access to Expert-Tailored Solutions

See step-by-step solutions with expert insights and AI powered tools for academic success

Step: 2

blur-text-image_2

Step: 3

blur-text-image_3

Ace Your Homework with AI

Get the answers you need in no time with our AI-driven, step-by-step assistance

Get Started

Recommended Textbook for

Financial Management For Nonprofit Organizations Policies And Practices

Authors: Jo Ann Hankin, John Zietlow, Alan Seidner, Tim O'Brien

3rd Edition

1119382564, 9781119382560

More Books

Students also viewed these Finance questions