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

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Finance

McGilla Golf has decided to sell a new line of golf clubs. Theclubs will sell for $844 per set and have a variable cost of $410per set. The company has spent $19304 for a marketing study thatdetermined the company will sell 5560 sets per year for sevenyears. The marketing study also determined that the company willlose sales of 939 sets of its high-priced clubs. The high-pricedclubs sell at $1081 and have variable costs of $652. The companywill also increase sales of its cheap clubs by 1177 sets. The cheapclubs sell for $472 and have variable costs of $253 per set. Thefixed costs each year will be $909281. The company has also spent$107765 on research and development for the new clubs. The plantand equipment required will cost $2828096 and will be depreciatedon a straight-line basis. The new clubs will also require anincrease in net working capital of $133090 that will be returned atthe end of the project. The tax rate is 30 percent, and the cost ofcapital is 10 percent. What is the annual OCF for this project?

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