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

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

80.2K

Verified Solution

Question

Finance

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?

Answer & Explanation Solved by verified expert
4.1 Ratings (457 Votes)
Increased contribution from cheap clubs price of cheap club variable cost number of clubsLost contribution from highend clubs    See Answer
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

Chemistry
1.2K views

Useful Information: The 25.0 wt % ethylenediamine solution contains 25.0 % ethylenediamine by mass, dissolved in...

Biology
1.2K views

For following variable Age in Years select the correct measurement scale A Nominal B Ordinal...

Physics
1.2K views

An elliptical smooth wire frame carries a bead of mass m and is moved along...

Basic Math
1.2K views

Residential staircases are usually built with a slope of 70 If the vertical distance between...

Calculus
1.2K views

Let f x be given by the following graph 1 5 1 0 5 1...

Calculus
1.2K views

Project motion of a model rocket When a model rocket is launched the fuel burns...

Algebra
1.2K views

ine sales of certain products in three cities are given in the 4 by 3...

Accounting
1.2K views

___is called the parent company. Question 14 options: Investee Investor Stakeholder

Accounting
1.2K views

A large retailer reported revenue of $1,685,000. The companys gross profit percentage was 31 percent....

Accounting
1.2K views

PA9-1 (Algo) Computing Acquisition Cost and Recording Depreciation under Three Alternative Methods [LO 9-2, LO...

Accounting
1.2K views

describe two sources of secondary resarch for iphone

Accounting
1.2K views

1 hour to Answer please help me! I will UPVOTE and make good comment or...