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 $421,808.00 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 | $63.48 | $63.48 |
| Units sold | 19,002.00 | 11,591.00 |
| COGS | 39.00% of sales | 39.00% of sales |
| Selling and Administrative | 21.00% of sales | 21.00% 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 $161,362.00.
What is the NPV of the project?
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New Issues In Financial And Credit Markets
Authors: Franco Fiordelisi , Philip Molyneux, Daniele Previati
1st Edition
0230275443, 978-0230275447
