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 $404,785.00 that will be depreciated using the 5-year MACRS schedule. The project will run for 2 years with the following forecasted numbers:
Year 1Year 2Putter price$61.34$61.34Units sold18,979.0010,809.00COGS40.00% of sales40.00% of salesSelling and Administrative21.00% of sales21.00% of sales
Calloway has a 12.00% cost of capital and a 37.00% tax rate. The firm expects to sell the equipment after 2 years for a NSV of $135,344.00.
What is the NPV of the project?
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