Answered step by step
Verified Expert Solution
Question
1 Approved Answer
Question 1 1 pts McGilla Golf has decided to sell a new line of golf clubs. The clubs will sell for $814 per set and
Question 1 1 pts McGilla Golf has decided to sell a new line of golf clubs. The clubs will sell for $814 per set and have a variable cost of $431 per set. The company has spent $14229 for a marketing study that determined the company will sell 5234 sets per year for seven years. The marketing study also determined that the company will lose sales of 969 sets of its high-priced clubs. The high-priced clubs sell at $1150 and have variable costs of $698. The company will also increase sales of its cheap clubs by 1055 sets. The cheap clubs sell for $427 and have variable costs of $239 per set. The fixed costs each year will be $958189. The company has also spent $114552 on research and development for the new clubs. The plant and equipment required will cost $2816903 and will be depreciated on a straight-line basis. The new clubs will also require an increase in net working capital of $133835 that will be returned at the end of the project. The tax rate is 31 percent, and the cost of capital is 9 percent. What is the annual OCF for this project? (Round your final answer to the nearest dollar amount. Omit the "$" sign and commas in your response. For example, $123,456.78 should be entered as 123457.)
Step by Step Solution
There are 3 Steps involved in it
Step: 1
Get Instant Access to Expert-Tailored Solutions
See step-by-step solutions with expert insights and AI powered tools for academic success
Step: 2
Step: 3
Ace Your Homework with AI
Get the answers you need in no time with our AI-driven, step-by-step assistance
Get Started