a. Calculate the payback period. (Do not round intermediate calculations and round your answer to 3 decimal places, e.g., 32.161.) b. Calculate the NPV. (Do not round intermediate calculations and round your answer to 2 decimal places, e.g., 32.16.) c. Calculate the IRR. (Do not round intermediate calculations and enter your answer as a percent rounded to 2 decimal places, e.g., 32.16.)
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McGilla Golf has decided to sell a new line of golf clubs. The clubs will sell for $840 per set and have a variable cost of $400 per set. The company has spent $290,000 for a marketing study that determined the company will sell 69,100 sets per year for seven years. The marketing study also determined that the company will lose sales of 12,800 sets of its high-priced clubs. The high-priced clubs sell at $1,210 and have variable costs of $670. The company will also increase sales of its cheap clubs by 14,800 sets. The cheap clubs sell for $430 and have variable costs of $220 per set. The fixed costs each year will be $10,500,000. The company has also spent $2,400,000 on research and development for the new clubs. The plant and equipment required will cost $38,700,000 and will be |
| a. |
Calculate the payback period. (Do not round intermediate calculations and round your answer to 3 decimal places, e.g., 32.161.) |
| b. | Calculate the |
| c. | Calculate the IRR. (Do not round intermediate calculations and enter your answer as a percent rounded to 2 decimal places, e.g., 32.16.) |
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- McGilla Golf has decided to sell a new line of golf clubs. The clubs will sell for $840 per set and have a variable cost of $400 per set. The company has spent $290,000 for a marketing study that determined the company will sell 69,100 sets per year for seven years. The marketing study also determined that the company will lose sales of 12,800 sets of its high-priced clubs. The high-priced clubs sell at $1,210 and have variable costs of $670. The company will also increase sales of its cheap clubs by 14,800 sets. The cheap clubs sell for $430 and have variable costs of $220 per set. The fixed costs each year will be $10,500,000. The company has also spent $2,400,000 on research and development for the new clubs. The plant and equipment required will cost $38,700,000 and will be depreciated on a straight-line basis. The new clubs will also require an increase in net working capital of $3,100,000 that will be returned at the end of the project. The tax rate is 24 percent, and the cost of…McGilla Golf has decided to sell a new line of golf clubs. The clubs will sell for $710 per set and have a variable cost of $310 per set. The company has spent $141,000 for a marketing study that determined the company will sell 53,000 sets per year for seven years. The marketing study also determined that the company will lose sales of 8,600 sets of its high-priced clubs. The high-priced clubs sell at $1,010 and have variable costs of $610. The company will also increase sales of its cheap clubs by 10,100 sets. The cheap clubs sell for $350 and have variable costs of $185 per set. The fixed costs each year will be $9,010,000. The company has also spent $1,020,000 on research and development for the new clubs. The plant and equipment required will cost $28,070,000 and will be depreciated on a straight-line basis. The new clubs will also require an increase in net working capital of $1,210,000 that will be returned at the end of the project. The tax rate is 22 percent, and the cost of…McGilla Golf has decided to sell a new line of golf clubs. The clubs will sell for $775 per set and have a variable cost of $335 per set. The company has spent $160,000 for a marketing study that determined the company will sell 61,000 sets per year for seven years. The marketing study also determined that the company will lose sales of 10,200 sets of its high-priced clubs. The high-priced clubs sell at $1,145 and have variable costs of $605. The company will also increase sales of its cheap clubs by 12,200 sets. The cheap clubs sell for $365 and have variable costs of $155 per set. The fixed costs each year will be $9,850,000. The company has also spent $1,100,000 on research and development for the new clubs. The plant and equipment required will cost $37,400,000 and will be depreciated on a straight-line basis. The new clubs will also require an increase in net working capital of $1,800,000 that will be returned at the end of the project. The tax rate is 21 percent, and the cost of…
- McGilla Golf has decided to sell a new line of golf clubs. The clubs will sell for $860 per set and have a variable cost of $420 per set. The company has spent $330,000 for a marketing study that determined the company will sell 70,300 sets per year for seven years. The marketing study also determined that the company will lose sales of 13,600 sets of its high-priced clubs. The high-priced clubs sell at $1,230 and have variable costs of $690. The company will also increase sales of its cheap clubs by 15,600 sets. The cheap clubs sell for $450 and have variable costs of $240 per set. The fixed costs each year will be $10,700,000. The company has also spent $2,800,000 on research and development for the new clubs. The plant and equipment required will cost $39,100,000 and will be depreciated on a straight-line basis. The new clubs will also require an increase in net working capital of $3,500,000 that will be returned at the end of the project. The tax rate is 23 percent, and the cost of…McGilla Golf has decided to sell a new line of golf clubs. The clubs will sell for $815 per set and have a variable cost of $365 per set. The company has spent $150,000 for a marketing study that determined the company will sell 55,000 sets per year for seven years. The marketing study also determined that the company will lose sales of 10,000 sets of its high-priced clubs. The high-priced clubs sell at $1,345 and have variable costs of $730. The company will also increase sales of its cheap clubs by 12,000 sets. The cheap clubs sell for $445 and have variable costs of $210 per set. The fixed costs each year will be $9.45 million. The company has also spent $1 million on research and development for the new clubs. The plant and equipment required will cost $39.2 million and will be depreciated on a straight-line basis. The new clubs will also require an increase in net working capital of $1.85 million that will be returned at the end of the project. The tax rate is 25 percent, and the…McGilla Golf has decided to sell a new line of golf clubs. The clubs will sell for $815 per set and have a variable cost of $365 per set. The company has spent $150,000 for a marketing study that determined the company will sell 55,000 sets per year for seven years. The marketing study also determined that the company will lose sales of 10,000 sets of its high-priced clubs. The high-priced clubs sell at $1,345 and have variable costs of $730. The company will also increase sales of its cheap clubs by 12,000 sets. The cheap clubs sell for $445 and have variable costs of $210 per set. The fixed costs each year will be $9.45 million. The company has also spent $1 million on research and development for the new clubs. The plant and equipment required will cost $39.2 million and will be depreciated on a straight-line basis. The new clubs will also require an increase in net working capital of $1.85 million that will be returned at the end of the project. The tax rate is 25 percent, and the…
- McGilla Golf has decided to sell a new line of golf clubs. The clubs will sell for $815 per set and have a variable cost of $365 per set. The company has spent $150,000 for a marketing study that determined the company will sell 55,000 sets per year for seven years. The marketing study also determined that the company will lose sales of 10,000 sets of its high-priced clubs. The high-priced clubs sell at $1,345 and have variable costs of $730. The company will also increase sales of its cheap clubs by 12,000 sets. The cheap clubs sell for $445 and have variable costs of $210 per set. The fixed costs each year will be $9.45 million. The company has also spent $1 million on research and development for the new clubs. The plant and equipment required will cost $39.2 million and will be depreciated on a straight-line basis. The new clubs will also require an increase in net working capital of $1.85 million that will be returned at the end of the project. The tax rate is 25 percent, and the…McGilla Golf has decided to sell a new line of golf clubs. The clubs will sell for $739 per set and have a variable cost of $369 per set. The company has spent $159,000 for a marketing study that determined the company will sell 75,900 sets per year for seven years. The marketing study also determined that the company will lose sales of 9,400 sets per year of its high-priced clubs. The high-priced clubs sell at $1,290 and have variable costs of $630. The company will also increase sales of its cheap clubs by 11,900 sets per year. The cheap clubs sell for $349 and have variable costs of $134 per set. The fixed costs each year will be $11,290,000. The company has also spent $1,090,000 on research and development for the new clubs. The plant and equipment required will cost $25,130,000 and will be depreciated on a straight-line basis. The new clubs will also require an increase in net working capital of $1,590,000 that will be returned at the end of the project. The tax rate is 35…McGilla Golf has decided to sell a new line of golf clubs. The clubs will sell for $815 per set and have a variable cost of $365 per set. The company has spent $150,000 for a marketing study that determined the company will sell 55,000 sets per year for seven years. The marketing study also determined that the company will lose sales of 10,000 sets of its high-priced clubs. The high-priced clubs sell at $1,345 and have variable costs of $730. The company will also increase sales of its cheap clubs by 12,000 sets. The cheap clubs sell for $445 and have variable costs of $210 per set. The fixed costs each year will be $9.45 million. The company has also spent $1 million on research and development for the new clubs. The plant and equipment required will cost $39.2 million and will be depreciated on a straight-line basis. The new clubs will also require an increase in net working capital of $1.85 million that will be returned at the end of the project. The tax rate is 25 percent, and the…
- McGilla Golf has decided to sell a new line of golf clubs. The clubs will sell for $815 per set and have a variable cost of $365 per set. The company has spent $150,000 for a marketing study that determined the company will sell 55,000 sets per year for seven years. The marketing study also determined that the company will lose sales of 10,000 sets of its high-priced clubs. The high-priced clubs sell at $1,345 and have variable costs of $730. The company will also increase sales of its cheap clubs by 12,000 sets. The cheap clubs sell for $445 and have variable costs of $210 per set. The fixed costs each year will be $9.45 million. The company has also spent $1 million on research and development for the new clubs. The plant and equipment required will cost $39.2 million and will be depreciated on a straight-line basis. The new clubs will also require an increase in net working capital of $1.85 million that will be returned at the end of the project. The tax rate is 25 percent, and the…McGilla Golf has decided to sell a new line of golf clubs. The clubs will sell for $825 per set and have a variable cost of $385 per set. The company has spent $260,000 for a marketing study that determined the company will sell 68,200 sets per year for seven years. The marketing study also determined that the company will lose sales of 12,200 sets of its high-priced clubs. The high-priced clubs sell at $1,195 and have variable costs of $655. The company will also increase sales of its cheap clubs by 14,200 sets. The cheap clubs sell for $415 and have variable costs of $205 per set. The fixed costs each year will be $10,350,000. The company has also spent $2,100,000 on research and development for the new clubs. The plant and equipment required will cost $38,400,000 and will be depreciated on a straight-line basis. The new clubs will also require an increase in net working capital of $2,800,000 that will be returned at the end of the project. The tax rate is 21 percent, and the cost of…McGilla Golf has decided to sell a new line of golf clubs. The clubs will sell for $965 per set and have a variable cost of $487 per set. The company has spent $340,000 for a marketing study that determined the company will sell 94,000 sets per year for seven years. The marketing study also determined that the company will lose sales of 9,300 sets per year of its high-priced clubs. The high-priced clubs sell at $1,395 and have variable costs of $715. The company will also increase sales of its cheap clubs by 12,200 sets per year. The cheap clubs sell for $396 and have variable costs of $183 per set. The fixed costs each year will be $15,750,000. The company has also spent $2,900,000 on research and development for the new clubs. The plant and equipment required will cost $59,100,000 and will be depreciated on a straight-line basis. The new clubs will also require an increase in net working capital of $4,325,000 that will be returned at the end of the project. The tax rate is 24…