Nathan Caldwell Welding Company has decided to sell an improved design of gate posts. The

posts will sell for $$790$ per set and have a variable cost of $$390$ per set. The company has spent

$$149,000$ for a marketing study that determined the company will sell $53,000$ sets per year for

seven years. The marketing study also determined that the company will lose sales of $9,400$ sets

of its high$-$priced posts. The high$-$priced posts sell at $$1,090$ and have variable costs of $$690.$

The company will also increase sales of its cheap posts by $10,900$ sets. The cheap posts sell for

$$430$ and have variable costs of $$225$ per set. The fixed costs each year will be $$9,090,000.$ The

company has also spent $$1,100,000$ on research and development for the new posts. The plant

and equipment required will cost $$28,630,000$ and will be depreciated on a straight$-$line basis.

The new posts will also require an increase in net working capital of $$1,290,000$ that will be

returned at the end of the project. The tax rate is $34\%,$ and the cost of capital is $10\%.$

A$.$ Calculate the payback period $($In years, Do not round intermediate calculations, round

answer to $3$ decimal places$)$

B$.$ Calculate the NPV $($In $$,$ Do not round intermediate calculations$)$

C$.$ Calculate the IRR. $($In $\%,$ Do not round intermediate calculations$)$

Suppose you feel that the values are accurate to within only $\frac{?}{?}10$ percent. What are the

best$-$case and worst$-$case NPVs$?$

$($Hint: The price and variable costs for the two existing sets of posts are known with certainty;

only the sales gained or lost are uncertain.$)($A negative answer should be indicated by a minus

sign. Do not round intermediate calculations$)$

D$.$ Calculate the Best Case NPV$.$

E$.$ Calculate the Worst Case NPV$.$

What is the sensitivity of the NPV to the price and quantity of the new posts?

F$.NP\frac{V}{}P=$$${?}_{{?}_{?}}$

G$.NP\frac{V}{}Q=$$