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 $423,523.00 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 | $61.41 | $61.41 |
| Units sold | 18,278.00 | 11,721.00 |
| COGS | 40.00% of sales | 40.00% of sales |
| Selling and Administrative | 19.00% of sales | 19.00% of sales |
Calloway has a 13.00% cost of capital and a 40.00% tax rate. The firm expects to sell the equipment after 2 years for a NSV of $132,642.00.
What is the project cash flow for year 1?
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Ethics In Finance
Authors: John R. Boatright
3rd Edition
1118615824, 978-1118615829
