Question
Suppose that Calloway golf would like to capitalize on Phil Michelson winning the Open Championship in 2013 by releasing a new putter. The new product
Suppose that Calloway golf would like to capitalize on Phil Michelson winning the Open Championship in 2013 by releasing a new putter. The new product will require new equipment for $407,398.00 that will be depreciated using the 5-year MACRS schedule. The project will run for 2 years with the following forecasted numbers:
| Year 1 | Year 2 | |
|---|---|---|
| Putter price | $62.42 | $62.42 |
| Units sold | 18,444.00 | 10,726.00 |
| COGS | 42.00% of sales | 42.00% of sales |
| Selling and Administrative | 19.00% of sales | 19.00% of sales |
Calloway has a 15.00% cost of capital and a 39.00% tax rate. The firm expects to sell the equipment after 2 years for a NSV of $150,016.00.
What is the NPV of the project?
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Theory Of Constraints Handbook
Authors: James Cox, John Schleier
1st Edition
0071665544, 978-0071665544
