Consider two mutually exclusive new product launch projects that Nagano Golf is considering. Assume the...
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Consider two mutually exclusive new product launch projects that Nagano Golf is considering. Assume the discount rate for both projects is 12 percent.
Project A: Nagano NP-30. Professional clubs that will take an initial investment of $850,000 at Time 0. 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 $600,000 at Time 0. Introduction of new product at Year 6 will terminate further cash flows from this project.
Year NP-30 NX-20
0 $ 850,000 $ 600,000
1 325,000 240,000
2 315,000 240,000
3 290,000 230,000
4 275,000 210,000
5 185,000 165,000
What is the required return?
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