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

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McGilla Golf has decided to sell a new line of golf clubs. Theclubs will sell for $793 per set and have a variable cost of $426per set. The company has spent $195392 for a marketing study thatdetermined the company will sell 5540 sets per year for sevenyears. The marketing study also determined that the company willlose sales of 975 sets of its high-priced clubs. The high-pricedclubs sell at $1144 and have variable costs of $684. The companywill also increase sales of its cheap clubs by 1064 sets. The cheapclubs sell for $448 and have variable costs of $206 per set. Thefixed costs each year will be $923933. The company has also spent$106620 on research and development for the new clubs. The plantand equipment required will cost $2889108 and will be depreciatedon a straight-line basis. The new clubs will also require anincrease in net working capital of $131019 that will be returned atthe end of the project. The tax rate is 29 percent, and the cost ofcapital is 8 percent. What is the sensitivity of the NPV to changesin the quantity of the new clubs sold?

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McGilla Golf has decided to sell a new line of golf clubs. Theclubs will sell for $793 per set and have a variable cost of $426per set. The company has spent $195392 for a marketing study thatdetermined the company will sell 5540 sets per year for sevenyears. The marketing study also determined that the company willlose sales of 975 sets of its high-priced clubs. The high-pricedclubs sell at $1144 and have variable costs of $684. The companywill also increase sales of its cheap clubs by 1064 sets. The cheapclubs sell for $448 and have variable costs of $206 per set. Thefixed costs each year will be $923933. The company has also spent$106620 on research and development for the new clubs. The plantand equipment required will cost $2889108 and will be depreciatedon a straight-line basis. The new clubs will also require anincrease in net working capital of $131019 that will be returned atthe end of the project. The tax rate is 29 percent, and the cost ofcapital is 8 percent. What is the sensitivity of the NPV to changesin the quantity of the new clubs sold?