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please help McGilla Golf has decided to sell a new line of golf clubs. The clubs will sell for $905 per set and have a
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McGilla Golf has decided to sell a new line of golf clubs. The clubs will sell for $905 per set and have a variable cost of $439 per set. The company has spent $220,000 for a marketing study that determined the company will sell 82,000 sets per year for seven years. The marketing study also determined that the company will lose sales of 8,700 sets per year of its high-priced clubs. The high-priced clubs sell at $1,335 and have variable costs of $655. The company will also increase sales of its cheap clubs by 11,000 sets per year. The cheap clubs sell for $348 and have variable costs of $147 per set. The fixed costs each year will be $14,550,000. The company has also spent $1,700,000 on research and development for the new clubs. The plant and equipment required will cost $45,900,000 and will be depreciated on a straight-line basis. The new clubs will also require an increase in net working capital of $3,725,000 that will be returned at the end of the project. The tax rate is 22 percent, and the cost of capital is 13 percent. Calculate the payback period, the NPV, and the IRR. Note: Do not round intermediate calculations and round your answers to 2 decimal places, e.g., 32.16. Enter your IRR answer as a percentStep by Step Solution
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