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 $402,815.00 that will be depreciated using the 5-year MACRS schedule. The project will run for 2 years with the following forecasted numbers:
Year 1: Sales= 1,208,581.00 COGS & Expenses= 737,234.41
Year 2: Sales= 719,337.52 COGS & Expenses= 438,795.89
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 $139,293.00.
What is the NPV of the project?
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