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McGilla Golf has decided to sell a new line of golf clubs and would like to know the sensitivity of NPV to changes in the
McGilla Golf has decided to sell a new line of golf clubs and 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?
Note: Do not round intermediate calculations and round your answers to decimal places, eg
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