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 $406,762.00 that will be depreciated using the 5-year MACRS schedule. The project will run for 2 years with the following forecasted numbers: Year 1 Year 2 Putter price Units sold $63.07 COGS 18,114.00 41.00% of sales Selling and Administrative 19.00% of sales $63.07 10,757.00 41.00% of sales 19.00% of sales Calloway has a 14.00% cost of capital and a 38.00% tax rate. The firm expects to sell the equipment after 2 years for a NSV of $125,352.00. What is the NPV of the project?

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 $406,762.00 that will be depreciated using the 5-year MACRS schedule. The project will run for 2 years with the following forecasted numbers: Year 1 Year 2 Putter price Units sold $63.07 COGS 18,114.00 41.00% of sales Selling and Administrative 19.00% of sales $63.07 10,757.00 41.00% of sales 19.00% of sales Calloway has a 14.00% cost of capital and a 38.00% tax rate. The firm expects to sell the equipment after 2 years for a NSV of $125,352.00. What is the NPV of the project?

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Description: 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 newequipment for $406,762.00 that will be depreciated using the 5-year MACRS schedule

Principles of Accounting Volume 2

19th Edition

ISBN:9781947172609

Author:OpenStax

Publisher:OpenStax

Chapter11: Capital Budgeting Decisions

Section: Chapter Questions

Problem 17EB: Caduceus Company is considering the purchase of a new piece of factory equipment that will cost...

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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 $421,096.00 that will be depreciated using the 5-year MACRS schedule. The project will run for 2 years with the following forecasted numbers: Year 1 Year 2 Putter price $60.58 $60.58 Units sold 18, 005.00 10, 527.00 COGS 38.00% of sales 38.00% of sales Selling and Administrative 20.00% of sales 20.00% of sales Calloway has a 14.00% cost of capital and a 38.00% tax rate. The firm expects to sell the equipment after 2 years for a NSV of $156, 433.00. What is the project cash flow for year 2? (include the terminal cash flow here) Submit Answer format: Currency: Round to: 2 decimal places.
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