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 $423,694.00 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 | $60.21 | $60.21 |
| Units sold | 18,548.00 | 10,420.00 |
| COGS | 39.00% of sales | 39.00% of sales |
| Selling and Administrative | 21.00% of sales | 21.00% of sales |
Calloway has a 13.00% cost of capital and a 38.00% tax rate. The firm expects to sell the equipment after 2 years for a NSV of $131,021.00.
What is the NPV of the project?
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Financial Management for Public Health and Not for Profit Organizations
Authors: Steven A. Finkler, Thad Calabrese
4th edition
133060411, 132805669, 9780133060416, 978-0132805667
