Answered step by step
Verified Expert Solution
Link Copied!

Question

1 Approved Answer

Please help solve this question. Thank you. McGlla Golf is evaluating a new line of golf clubs. The clubs will sell for $1,030 per set

Please help solve this question. Thank you.
image text in transcribed
McGlla Golf is evaluating a new line of golf clubs. The clubs will sell for $1,030 per set and have a varlable cost of $465 per set. The company has spent $165.000 for a marketing study that determined the company will sell 52,000 sets per year for seven years. The marketing study also determined that the company will lose sales of 9,800 sets of its high-priced clubs. The high-priced clubs sell at $1,530 and have variable costs of $660. The company also will increase sales of its cheap clubs by 12,400 sets. The cheap clubs sell for $465 and have varlable costs of $195 per set. The fixed costs each year will be $9,800,000. The company has also spent $1,250,000 on research and development for the new clubs. The plant and equipment required will cost $32,200,000 and will be depreclated on a straight-line basis to a zero salvage value. The new clubs will also require an increase in net working capital of $2,620,000 that will be returned at the end of the project. The tax rate is 25 percent. and the cost of capital is 14 percent. a. Calculate the payback period. (Do not round intermediate calculations and round your answer to 3 decimal places, e.g., 32161.) b. Calculate the NPV. (Do not round intermediate calculations and round your answer to 2 decimal places, e.g. 3216.) c. Calculate the IRR. (Do not round intermediate calculations and enter your answer as a percent rounded to 2 decimal places, e.g. 3216 .)

Step by Step Solution

There are 3 Steps involved in it

Step: 1

blur-text-image

Get Instant Access to Expert-Tailored 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

Recommended Textbook for

The Compensation Committee Handbook

Authors: James F. Reda, Stewart Reifler, Michael L. Stevens

4th Edition

1118370619, 978-1118370612

More Books

Students also viewed these Finance questions

Question

Explain the rationale for using n 1 to compute the sample variance.

Answered: 1 week ago

Question

1. What is meant by Latitudes? 2. What is cartography ?

Answered: 1 week ago

Question

What is order of reaction? Explain with example?

Answered: 1 week ago