Ee 424. McGilla Golf has decided to sell a new line of golf clubs. The clubs will sell for $820 perset and have a variable cost of $420 per set. The company has spent $152,000 for amarketing study that determined the company will sell 56,000 sets per year for sevenyears. The marketing study also determined that the company will lose sales of 9,700sets of its high-priced clubs. The high-priced clubs sell at $1,120 and have variable costsof $720. The company will also increase sales of its cheap clubs by 11,200 sets. Thecheap clubs sell for $460 and have variable costs of $240 per set. The fixed costs eachyear will be $9,120,000. The company has also spent $1,130,000 on research anddevelopment for the new clubs. The plant and equipment required will cost $28,840,000and will be depreciated on a straight-line basis. The new clubs will also require anincrease in net working capital of $1,320,000 that will be returned at the end of theproject. The tax rate is 23 percent, and the cost of capital is 10 percent.Suppose you feel that the values are accurate to within only ±10 percent. What are thebest-case and worst-case NPVS? (Hint: The price and variable costs for the two existingsets of clubs are known with certainty, only the sales gained or lost are uncertain.) (Anegative answer should be indicated by a minus sign. Do not round intermediatecalculations and round your answers to 2 decimal places, e.g., 32.16.)Best-case NPVWorst-case NPV

Answered: Image /qna-images/answer/55c3d102-3b05-4b9d-bc4c-8dbd5addf585.jpg

Suppose you feel that the values are accurate to within only ±10 percent. What are the best-case and worst-case NPVs? (Hint: The price and variable costs for the two existing sets of clubs are known with certainty, only the sales gained or lost are uncertain.) (A

Suppose you feel that the values are accurate to within only ±10 percent. What are the best-case and worst-case NPVs? (Hint: The price and variable costs for the two existing sets of clubs are known with certainty, only the sales gained or lost are uncertain.) (A

Essentials Of Business Analytics

1st Edition

ISBN:9781285187273

Author:Camm, Jeff.

Publisher:Camm, Jeff.

Chapter11: Monte Carlo Simulation

Section: Chapter Questions

Problem 3P

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