McGilla Golf is evaluating a new golf club. The clubs will sell for $890 per set and have avariable cost of $395 per set. The company has spent $130,000 for a marketing studythat determined the company will sell 45,000 sets per year for seven years. Themarketing study also determined that the company will lose sales of 8.400 sets of itshigh-priced clubs. The high-priced clubs sell at $1,390 and have variable costs of $520.The company also will increase sales of Its cheap clubs by 11,000 sets. The cheap clubssell for $395 and have variable costs of $125 per set. The fixed costs each year will be$9,100,000. The company has also spent $900,000 on research and development forthe new clubs. The plant and equipment required will cost $27,300,000 and will bedepreciated on a straight-line basis to a zero salvage value. The new clubs will alsorequire an increase in net working capital of $2,200,000 that will be returned at the endof the project. The tax rate is 21 percent, and the cost of capital is 12 percent. What is thesenstivity of the NPV to changes in the price and quantity sold of the new clubs? (Do notround Intermediate calculations and round your answers to 2 decimal places, e.g..32.16.)ANPVIAPANPVIAQ

Net Present Value (NPV) is a financial metric used in capital budgeting and investment analysis to…

Answered: McGilla Golf Is evaluating a new golf…

Essentials Of Business Analytics

1st Edition

ISBN:9781285187273

Author:Camm, Jeff.

Publisher:Camm, Jeff.

Chapter11: Monte Carlo Simulation

Section: Chapter Questions

Problem 3P

See similar textbooks

Similar questions

McGilla Golf has decided to sell a new line of golf clubs. The clubs will sell for $895 per set and have a variable cost of $431 per set. The company has spent $200,000 for a marketing study that determined the company will sell 80,000 sets per year for seven years. The marketing study also determined that the company will lose sales of 8,600 sets per year of its high-priced clubs. The high-priced clubs sell at $1,325 and have variable costs of $645. The company will also increase sales of its cheap clubs by 10,800 sets per year. The cheap clubs sell for $340 and have variable costs of $141 per set. The fixed costs each year will be $14,350,000. The company has also spent $1,500,000 on research and development for the new clubs. The plant and equipment required will cost $43,700,000 and will be depreciated on a straight-line basis. The new clubs will also require an increase in net working capital of $3,625,000 that will be returned at the end of the project. The tax rate is 25…
McGilla Golf is evaluating a new line of golf clubs. The clubs will sell for $1,030 per set and have a variable cost of $465 per set. The company has spent $165,000 for a marketing study that determined the company will sell 52,000 sets per year for seven years. The marketing study also determined that the company will lose sales of 9,800 sets of its high-priced clubs. The high-priced clubs sell at $1,530 and have variable costs of $660. The company also will increase sales of its cheap clubs by 12,400 sets. The cheap clubs sell for $465 and have variable costs of $195 per set. The fixed costs each year will be $9,800,000. The company has also spent $1,250,000 on research and development for the new clubs. The plant and equipment required will cost $32,200,000 and will be depreciated on a straight-line basis to a zero salvage value. The new clubs will also require an increase in net working capital of $2,620,000 that will be returned at the end of the project. The tax rate is 25…
McGilla Golf has decided to sell a new line of golf clubs. The clubs will sell for $915 per set and have a variable cost of $447 per set. The company has spent $240,000 for a marketing study that determined the company will sell 84,000 sets per year for seven years. The marketing study also determined that the company will lose sales of 8,800 sets per year of its high-priced clubs. The high-priced clubs sell at $1,345 and have variable costs of $665. The company will also increase sales of its cheap clubs by 11,200 sets per year. The cheap clubs sell for $356 and have variable costs of $153 per set. The fixed costs each year will be $14,750,000. The company has also spent $1,900,000 on research and development for the new clubs. The plant and equipment required will cost $48,100,000 and will be depreciated on a straight-line basis. The new clubs will also require an increase in net working capital of $3,825,000 that will be returned at the end of the project. The tax rate is 24…
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…
McGill Golf has decided to sell a new line of golf clubs. The clubs will sell for $925 per set and have a variable cost of $480 per set. The company has spent $150,000 on a marketing study that determined the company will sell 75,000 sets per year for seven years. The marketing study also determined that the company will lose sales of 8,800 sets per year of its high-priced clubs. The high-priced clubs sell at $1,325 and have variable costs of $640. The company also will increase sales of its cheap clubs by 11,000 sets per year. The cheap clubs sell for $385 and have variable costs of $160 per set. The fixed costs each year will be $14.65 million. The company also has spent $1 million on research and development for the new clubs. The plant and equipment required will cost $30.1 million and will be depreciated on a straight-line basis. The new clubs also will require an increase in net working capital of $3.5 million that will be returned at the end of the project. The tax rate is 23…
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 $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 $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 $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…
Thomas Arr Golf Corp has decided to sell a new line of golf clubs. The clubs will sell for $1000 per set and have a variable cost of $447 per set. The company has spent $560,000 for a marketing study that determined the company will sell 84,000 sets per year for 7 years. The marketing study also determined that the company will lose sales of 8,800 sets per year of its high-priced clubs. The high-priced clubs sell at $1,345 and have variable costs of $665. The company will also increase sales of its cheap clubs by 11,200 sets per year. The cheap clubs sell for $356 and have variable costs of $153 per set. The fixed costs each year will be $14,750,000. The company has also spent $2,000,000 on research and development for the new clubs. The plant and equipment required will cost $48,000,000 and will be depreciated to a book value of zero on a straight-line basis. The equipment useful life is 9 years and the salvage value is subsequently assumed to be $3,000,000. The new clubs will…
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 $790 per set and have a variable cost of $390 per set. The company has spent $149,000 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 9,400 sets of its high-priced clubs. The high-priced clubs sell at $1,090 and have variable costs of $690. The company will also increase sales of its cheap clubs by 10,900 sets. The cheap clubs sell for $430 and have variable costs of $225 per set. The fixed costs each year will be $9,090,000. The company has also spent $1,100,000 on research and development for the new clubs. The plant and equipment required will cost $28,630,000 and will be depreciated on a straight-line basis. The new clubs will also require an increase in net working capital of $1,290,000 that will be returned at the end of the project. The tax rate is 34 percent, and the cost of…

SEE MORE QUESTIONS

Recommended textbooks for you

Essentials Of Business Analytics

Statistics

ISBN:

9781285187273

Author:

Camm, Jeff.

Publisher:

Cengage Learning,

Essentials Of Business Analytics

Statistics

ISBN:

9781285187273

Author:

Camm, Jeff.

Publisher:

Cengage Learning,

SEE MORE TEXTBOOKS