Logo
Home Study Material Contact Search
AI Chat FREE
  1. business
  2. finance
  3. fleming golf has decided to sell a new line of gol

Fleming Golf has decided to sell a new line of golf clubs. The clubs will...

60.1K

Verified Solution

Question

Finance

Fleming Golf has decided to sell a new line of golf clubs. The clubs will sell for $900 per set and have a variable cost of 75% of revenues per set. The company has spent $250,000 for a marketing study that determined the company will sell 80,000 sets per year for seven years. The company also plans to offer a line of golf balls, which are expected to sell for $45/dozen and have a variable cost of $15/dozen. The company expects to sell 100,000 dozen golf balls. The fixed costs each year will be $15,200,000. The company has also spent $1,000,000 on research and development for the new clubs. The plant and equipment required will cost $20,500,000 and will be depreciated using the MACRS seven-year schedule. The equipment will be sold for 125% of its book value in year 7. 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 25 percent. Information for computing the cost of capital is given in the previous problems. WACC is 8.19%.

1. Construct the proforma income statement for this project.

2. Calculate the NPV of the project.

3. Compute the IRR of the project.

4. Compute the profitability of the project.

Answer & Explanation Solved by verified expert
Get Answers to Unlimited Questions

Join us to gain access to millions of questions and expert answers. Enjoy exclusive benefits tailored just for you!

Membership Benefits:
  • Unlimited Question Access with detailed Answers
  • Zin AI - 3 Million Words
  • 10 Dall-E 3 Images
  • 20 Plot Generations
  • Conversation with Dialogue Memory
  • No Ads, Ever!
  • Access to Our Best AI Platform: Flex AI - Your personal assistant for all your inquiries!
Become a Member

Other questions asked by students

Basic Math
1.2K views

If a cubic millimeter of blood contains 4 800 000 red blood cells how many...

Chemistry
1.2K views

Discuss how well VSEPR predicts shape, how shape contributes to chemical reactivity, and how computer modeling...

Biology
1.2K views

M 12 Breaks hydrogen bands resulting in th formation of areplication fork during the process...

Physics
1.2K views

If vectors cos coti sinot jand cof B cos sin 2 the value of t...

Basic Math
1.2K views

A random variable X can take on three possible values: -5,0, or 10. Each of...

Accounting
1.2K views

All of the following liabilities are likely to be satisfied with cash except a. accounts...

Accounting
1.2K views

Which is NOT required in order to qualify for the dependent care credit? A. The...

Accounting
1.2K views

(b) Determine the balance in accumulated other comprehensive income on the statement of financial...

Accounting
1.2K views

The following information applies to the questions displayed below.] MyBnB started a home rental...

Accounting
1.2K views

Which of Adam Smith's four canons of a good tax system refers to stability" of...

Accounting
1.2K views

Financial Statements of a Manufacturing Firm The following events took place for Bridger Bikes Inc....

Finance
1.2K views

A project that costs $120 000 now (year 0) provides profits of $20 000 for...