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 $423,949.00 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 | $64.80 | $64.80 |
| Units sold | 19,646.00 | 10,072.00 |
| COGS | 41.00% of sales | 41.00% of sales |
| Selling and Administrative | 18.00% of sales | 18.00% of sales |
Calloway has a 12.00% cost of capital and a 39.00% tax rate. The firm expects to sell the equipment after 2 years for a NSV of $163,397.00.
What is the NPV of the project?
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Financial Modeling
Authors: Simon Benninga, Tal Mofkadi
5th Edition
0262046423, 9780253337825
