Suppose you successfully finish the above capital budgeting work Immediately you are assigned another task to deal with TWFIN Golf TWFIN Golf is considering making a new line of over sized irons which are easy to play for people who are not expert in golf These new irons would be called the T3, and would have a 3 year product life TWFIN Golf has already researched and designed these new golf clubs The following information is about TWFIN Golf in order for you to estimate the projects cash flows TWFIN Golf has already spent $2,000,000 to research and design the T3s TWFIN Golf will need to buy $4,800,000 in new manufacturing equipment, which would be depreciated over 4 years to zero using the straight line depreciation At the end of the projects 3 year life, TWFIN Golf estimates that it can sell this equipment for $500,000 TWFIN Golf will also need $600,000 in additional working capital at the beginning of the project TWFIN Golf estimates that it can sell 12,000 sets of T3 in year 1, 16,000 sets in year 2, and 8,000 in year 3 The company also estimates that it can sell the T3 for $600 a set in years 1 2, but will only be able to sell for $500 a set in year 3 Variable costs will be $300 a set for all three years and TWFIN Golf also expects to have $350,000 extra in fixed manufacturing costs annually for this project TWFIN Golfs marginal tax rate is 36 TWFIN Golfs required rate of return is 19 Based on the above information, answer the following questions What is the initial cash flow (C0) for the TWFIN Golf T3 project What are the annual operating cash flows for the T3 project What is the end of project (year 3) non operating cash flow for the T3 project What is the NPV and IRR for the T3 Should TWFIN Golf produce these new golf clubs Why TWFIN Golfs current line of irons is the M1, which have an estimated product life of 1 year remaining Should TWFIN Golf go ahead with the T3 project if they thought next years M1 sales and variable costs would decrease by $2,800,000 and $1,300,000 respectively on a BEFORE TAX basis Show your work to support your answer

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Suppose you successfully finish the above capital budgeting work. Immediately you are assigned another task to deal with TWFIN Golf. TWFIN Golf is considering making a new line of over-sized irons which are easy to play for people who are not expert in golf. These new irons would be called the T3, and would have a 3-year product life. TWFIN Golf has already researched and designed these new golf clubs. The following information is about TWFIN Golf in order for you to estimate the projects cash flows.

TWFIN Golf has already spent $2,000,000 to research and design the T3s.
TWFIN Golf will need to buy $4,800,000 in new manufacturing equipment, which would be depreciated over 4 years to zero using the straight-line depreciation. At the end of the projects 3-year life, TWFIN Golf estimates that it can sell this equipment for $500,000.
TWFIN Golf will also need $600,000 in additional working capital at the beginning of the project.
TWFIN Golf estimates that it can sell 12,000 sets of T3 in year 1, 16,000 sets in year 2, and 8,000 in year 3. The company also estimates that it can sell the T3 for $600 a set in years 1 & 2, but will only be able to sell for $500 a set in year 3. Variable costs will be $300 a set for all three years and TWFIN Golf also expects to have $350,000 extra in fixed manufacturing costs annually for this project.
TWFIN Golfs marginal tax rate is 36%.
TWFIN Golfs required rate of return is 19%.

Based on the above information, answer the following questions.

What is the initial cash flow (C0) for the TWFIN Golf T3 project?
What are the annual operating cash flows for the T3 project?
What is the end of project (year 3) non-operating cash flow for the T3 project?
What is the NPV and IRR for the T3?
Should TWFIN Golf produce these new golf clubs? Why?
TWFIN Golfs current line of irons is the M1, which have an estimated product life of 1 year remaining. Should TWFIN Golf go ahead with the T3 project if they thought next years M1 sales and variable costs would decrease by $2,800,000 and $1,300,000 respectively on a BEFORE-TAX basis. Show your work to support your answer.