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 $405,804.00 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 | $64.98 | $64.98 |
| Units sold | 18,818.00 | 11,350.00 |
| COGS | 39.00% of sales | 39.00% of sales |
| Selling and Administrative | 19.00% of sales | 19.00% of sales |
Calloway has a 12.00% cost of capital and a 40.00% tax rate. The firm expects to sell the equipment after 2 years for a NSV of $126,311.00.
What is the NPV of the project?
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
Foundation Diploma Business Administration And Finance Level 1
Authors: Bernadette Fishpool
1st Edition
1846905109, 9781846905100
