I need the exact answer for: Best-case NPV: Worst-case NPV McGilla Golf has decided to sell a new...

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Finance

I need the exact answer for:

Best-case NPV:

Worst-case NPV

McGilla Golf has decided to sell a new line of golf clubs. Theclubs will sell for $855 per set and have a variable cost of $415per set. The company has spent $320,000 for a marketing study thatdetermined the company will sell 70,000 sets per year for sevenyears. The marketing study also determined that the company willlose sales of 13,400 sets of its high-priced clubs. The high-pricedclubs sell at $1,225 and have variable costs of $685. The companywill also increase sales of its cheap clubs by 15,400 sets. Thecheap clubs sell for $445 and have variable costs of $235 per set.The fixed costs each year will be $10,650,000. The company has alsospent $2,700,000 on research and development for the new clubs. Theplant and equipment required will cost $39,000,000 and will bedepreciated on a straight-line basis. The new clubs will alsorequire an increase in net working capital of $3,400,000 that willbe returned at the end of the project. The tax rate is 22 percent,and the cost of capital is 10 percent. Suppose you feel that thevalues are accurate to within only ±10 percent. What are thebest-case and worst-case NPVs? (Hint: The price and variable costsfor the two existing sets of clubs are known with certainty; onlythe sales gained or lost are uncertain.)

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I need the exact answer for:Best-case NPV:Worst-case NPVMcGilla Golf has decided to sell a new line of golf clubs. Theclubs will sell for $855 per set and have a variable cost of $415per set. The company has spent $320,000 for a marketing study thatdetermined the company will sell 70,000 sets per year for sevenyears. The marketing study also determined that the company willlose sales of 13,400 sets of its high-priced clubs. The high-pricedclubs sell at $1,225 and have variable costs of $685. The companywill also increase sales of its cheap clubs by 15,400 sets. Thecheap clubs sell for $445 and have variable costs of $235 per set.The fixed costs each year will be $10,650,000. The company has alsospent $2,700,000 on research and development for the new clubs. Theplant and equipment required will cost $39,000,000 and will bedepreciated on a straight-line basis. The new clubs will alsorequire an increase in net working capital of $3,400,000 that willbe returned at the end of the project. The tax rate is 22 percent,and the cost of capital is 10 percent. Suppose you feel that thevalues are accurate to within only ±10 percent. What are thebest-case and worst-case NPVs? (Hint: The price and variable costsfor the two existing sets of clubs are known with certainty; onlythe sales gained or lost are uncertain.)

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