Answered step by step
Verified Expert Solution
Link Copied!

Question

1 Approved Answer

McGilla Golf has decided to sell a new line of golf clubs. The clubs will sell for $925 per set and have a variable cost

McGilla Golf has decided to sell a new line of golf clubs. The clubs will sell for $925 per set and have a variable cost of $480 per set. The company has spent $150,000 for a marketing study that determined the company will sell 75,000 sets per year for seven years. The marketing study also determined that the company will lose sales of 8,800 sets per year of its high-priced clubs. The high- priced clubs sell at $1,325 and have variable costs of $640. The company also will increase sales of its cheap clubs by 11,000 sets per year. The cheap clubs sell for $385 and have variable costs of $160 per set. The fixed costs each year will be $14.65 million. The company also has spent $1 million on research and development for the new clubs. The plant and equipment required will cost $30.1 million and will be depreciated on a straight-line basis. The new clubs also will require an increase in net working capital of $3.5 million that will be returned at the end of the project. The tax rate is 23 percent, and the cost of capital is 14 percent. Calculate the payback period, the NPV, and the IRR. Please I need excel worksheet in link I dont want photo answer

Step by Step Solution

There are 3 Steps involved in it

Step: 1

blur-text-image

Get Instant Access with AI-Powered Solutions

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

Step: 2

blur-text-image

Step: 3

blur-text-image

Ace Your Homework with AI

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

Get Started

Students also viewed these Finance questions