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 $418,220.00 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 | $61.34 | $61.34 |
| Units sold | 19,538.00 | 10,432.00 |
| COGS | 41.00% of sales | 41.00% of sales |
| Selling and Administrative | 20.00% of sales | 20.00% of sales |
Calloway has a 15.00% cost of capital and a 38.00% tax rate. The firm expects to sell the equipment after 2 years for a NSV of $157,390.00.
What is the project cash flow for year 2? (include the terminal cash flow here)
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Chains Of Finance How Investment Management Is Shaped
Authors: Diane-Laure Arjalies, Philip Grant, Iain Hardie, Donald MacKenzie, Ekaterina Svetlova
1st Edition
0198802943, 978-0198802945
