1. Pong Golf has decided to sell a new line of golf clubs. The clubs will sell for $825 per set and have a variable cost of $415 per set. The company has spent $250,000 for a marketing study that determined the company will sell 68,000 sets per year for seven years. The marketing study also determined that the company will lose sales of 9,500 sets per year of its high-priced clubs. The high-priced clubs sell at $1,275 and have variable costs of $580. The company will also increase sales of its cheap clubs by 10,250 sets per year. The cheap clubs sell for $395 and have variable costs of $195 per set. The xed costs each year will be $18,500,000. The company has also spent $1,800,000 on research and development for the new clubs. The plant and equipment required will cost $27,500,000 and will be depreciated using the MACRS seven-year useful life table. The new clubs will also require an increase in net working capital of $1,250,000 that will be returned at the end of the project. At the end of the projects life, the capital equipment will be sold for its book value. The tax rate is 22 percent, and the cost of capital is 15 percent.

1. Calculate the payback period, the NPV and the IRR.
2. Test the sensitivity of NPV and IRR to a $30 decrease in the price of the new clubs.
3. Test the sensitivity of NPV and IRR to a $25 increase in the variable cost of the new clubs.

PLEASE INCLUDE NUMBERS (1,2,3) TO SHOW WHICH PART IS WHICH.