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McGilla Golf has decided to sell a new line of golf clubs. The company would like to know the sensitivity of NPV to changes in
McGilla Golf has decided to sell a new line of golf clubs. The
company would like to know the sensitivity of NPV to changes in the
price of the new clubs and the quantity of new clubs sold. The
clubs will sell for $ per set and have a variable cost of $
per set. The company has spent $ for a marketing study that
determined the company will sell sets per year for seven
years. The marketing study also determined that the company will
lose sales of sets of its highpriced clubs. The highpriced
clubs sell at $ and have variable costs of $ The company
will also increase sales of its cheap clubs by sets. The
cheap clubs sell for $ and have variable costs of $ per set.
The fixed costs each year will be $ The company has also
spent $ on research and development for the new clubs. The
plant and equipment required will cost $ and will be
depreciated on a straightline basis. The new clubs will also
require an increase in net working capital of $ that will
be returned at the end of the project. The tax rate is percent,
and the cost of capital is percent. What is the sensitivity of
the NPV to each of these variables? Do not round
intermediate calculations and round your answers to decimal
places, eg
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