McGilla Golkf has decided to sell a new line of golf clubs. The clubs will sell for $875 per set and have a variable cost of $430 per set. The company has spent $150,000 for a marketing study that determine the company will sell 60,000 sets per year for seven years. The marketing study also determined that then company will lose sales of 12,000 sets of hits high-priced clubs. The high-priced clubs sell at $1,100 and have variable costs of $620. The company will also increase sales of it cheap clubs by 15,000 sets. The cheap clubs sell for $400, and have variable costs of $210 per set. The fixed cost each year is $9,300,000. The company also spend $1,000,000 on R&D for the new clubs. The plant and equipment required will cost $29,400,000 and will be depreciated on a straight-line basis over 7 years to a salvage value of $0. The new clubs will also require an increase in net working capital of $1,400,000 that will be fully recovered at the end of the project. The tax rate is 40% and the cost of capital is 14 percent.

a) What are the incremental operating cash flows for this project?

b) What are the incremental cash flows associated with net working capital?

c) What are the incremental cash flows associated with investments?

d) What is the payback for this project?

e) What is the IRR of this project?

f) What is the NPV of this project?