McGilla Golf has decided to sell a new line of golf clubs. The clubs will sell for $885 per set and have a variable cost of $423 per set. The company has spent $180,000 for a marketing study that determined the company will sell 78,000 sets per year for seven years. The marketing study also determined that the company will lose sales of 8,500 sets per year of its high-priced clubs. The high-priced clubs sell at $1,315 and have variable costs of $635. The company will also increase sales of its cheap clubs by 10,600 sets per year. The cheap clubs sell for $332 and have variable costs of $135 per set. The fixed costs each year will be $14,150,000.

Calculate the Time 0 cash flow.

Construct the pro forma income statement.

Calculate the OCF.

Calculate the payback period, the NPV, and the IRR.