McGilla Golf has decided to sell a new line of golf clubs. Theclubs will sell for $847 per set and have a variable cost of $418per set. The company has spent $172024 for a marketing study thatdetermined the company will sell 5419 sets per year for sevenyears. The marketing study also determined that the company willlose sales of 929 sets of its high-priced clubs. The high-pricedclubs sell at $1106 and have variable costs of $704. The companywill also increase sales of its cheap clubs by 1013 sets. The cheapclubs sell for $470 and have variable costs of $237 per set. Thefixed costs each year will be $906113. The company has also spent$102009 on research and development for the new clubs. The plantand equipment required will cost $2857433 and will be depreciatedon a straight-line basis. The new clubs will also require anincrease in net working capital of $132372 that will be returned atthe end of the project. The tax rate is 30 percent, and the cost ofcapital is 11 percent. What is the sensitivity of the NPV tochanges in the price of the new clubs?
