McGilla Golf has decided to sell a new line of golf clubs. Theclubs will sell for $500 per set and have a variable cost of $200per set. The company spent $113,000 for a marketing study thatdetermined the company will sell 58,000 sets per year for 7 years.The marketing study also determined that the company will losesales of 15,000 sets of its high-priced clubs. The high-pricedclubs sell at $700 and have variable costs of $300. The companywill also increase sales of its cheap clubs by 9,000 sets. Thecheap clubs sell for $200 and have variable costs of $100 per set.The fixed costs each year will be $7,559,000. The company has alsospent $1,133,000 on research and development for the new clubs. Theplant and equipment required will cost $21,000,000 and will bedepreciated on a straight-line basis. The new clubs will alsorequire an increase in net working capital of $1,053,000 that willbe returned at the end of the project. The tax rate is 30 percent,and the cost of capital is 8 percent. What is the IRR?

		7.51 percent
		7.87 percent
		8.31 percent
		8.68 percent
		9.02 percent

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