We are evaluating a project that costs $1,920,000, has a 6-year life, and has no salvage value. Assume that depreciation is straight-line to zero over the life of the project. Sales are projected at 94,500 units per year. Price per unit is $38.43, variable cost per unit is $23.60, and fixed costs are $839,000 per year. The tax rate is 23 percent, and we require a return of 10 percent on this project.

Calculate the base-case operating cash flow and NPV.

Note: Do not round intermediate calculations and round your answers to 2 decimal places, e.g., 32.16.

What is the sensitivity of NPV to changes in the sales figure?

Note: Do not round intermediate calculations and round your answer to 3 decimal places, e.g., 32.161.

If there is a 250-unit decrease in projected sales, how much would the NPV change?

Note: A negative answer should be indicated by a minus sign. Do not round intermediate calculations and round your answer to 2 decimal places, e.g., 32.16.

What is the sensitivity of OCF to changes in the variable cost figure?

Note: A negative answer should be indicated by a minus sign. Do not round intermediate calculations and round your answer to the nearest whole number, e.g., 32.

If there is a $1 decrease in estimated variable costs, how much would the OCF change?

Note: Do not round intermediate calculations and round your answer to the nearest whole number, e.g., 32.

McGilla Golf has decided to sell a new line of golf clubs. The clubs will sell for $890 per set and have a variable cost of $427 per set. The company has spent $190,000 for a marketing study that determined the company will sell 79,000 sets per year for seven years. The marketing study also determined that the company will lose sales of 8,550 sets per year of its high-priced clubs. The high-priced clubs sell at $1,320 and have variable costs of $640. The company will also increase sales of its cheap clubs by 10,700 sets per year. The cheap clubs sell for $336 and have variable costs of $138 per set. The fixed costs each year will be $14,250,000. The company has also spent $1,400,000 on research and development for the new clubs. The plant and equipment required will cost $42,600,000 and will be depreciated on a straight-line basis. The new clubs will also require an increase in net working capital of $3,575,000 that will be returned at the end of the project. The tax rate is 24 percent, and the cost of capital is 14 percent. Calculate the payback period, the NPV, and the IRR.