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  1. business
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  3. consider two mutually exclusive new product launch

Consider two mutually exclusive new product launch projects that Nagano Golf is considering. Assume the...

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Finance

Consider two mutually exclusive new product launch projects that Nagano Golf is considering. Assume the discount rate for Nagano Golf is 16 percent.

Project A:

Nagano NP-30.
Professional clubs that will take an initial investment of $670,000 at time 0.
Next five years (Years 15) of sales will generate a consistent cash flow of $305,000 per year.

Introduction of new product at Year 6 will terminate further cash flows from this project

Project B:

Nagano NX-20.
High-end amateur clubs that will take an initial investment of $740,000 at Time 0.

Cash flow at Year 1 is $220,000. In each subsequent year cash flow will grow at 10 percent per year.

Introduction of new product at Year 6 will terminate further cash flows from this project

year NP-30 NX-20
0 -670,000 -740,000
1 305,000 220000
2 305,000 242,000
3 305,000 266,200
4 305,000 292,820
5 305,000 322,102

SOLVE:

NP-30 NX-20
PAYBACK ?? YEARS ?? YEARS
IRR ?? % ?? %
PI
NPV $ ?? $ ??

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