Marina Bay Golf has decided to sell a new line of golf clubs. The clubs will sell for $815 per set and have a variable cost of $375 per set. The company spent $240,000 for a marketing study that determined the company will sell 67,600 sets per year for seven years. The fixed costs each year will be $10,250,000. The company has also spent $1,900,000 on research and development for the new clubs. The plant and equipment required will cost $38,200,000 and will be depreciated on a straight-line basis to a zero salvage value. It will worthless at the end of the project. The new clubswill also require an increase in net working capital of $2,600,000 that will be returned at end of the project. The tax rate is 24 percent, and the cost of capital (i.e. the required return) is 12 percent.

Do not round intermediate calculations.

a-1. Calculate the payback period. (Round your final answer to 2 decimal places)

a-2. Calculate the NPV. (Enter your final answer as integer without using 1000 separator)

a-3. Calculate the IRR. (Enter your final answer as a percent rounded to 1 decimal places)

b. Suppose you feel that the values (for the new golf club price, unit sales, variable costs, and fixed costs) are accurate to within only +/-10 percent. What are the best-case and worst-case NPVs?

c. What is the sensitivity of the NPV to each of below variables?

NPV sensitivity to variable costs (VC):

NPV sensitivity to unit sales (Q)