McGilla Golf has decided to sell a new line of golf clubs. Theclubs will sell for $870 per set and have a variable cost of $470per set. The company has spent $157,000 for a marketing study thatdetermined the company will sell 61,000 sets per year for sevenyears. The marketing study also determined that the company willlose sales of 10,200 sets of its high-priced clubs. The high-pricedclubs sell at $1,170 and have variable costs of $770. The companywill also increase sales of its cheap clubs by 11,700 sets. Thecheap clubs sell for $510 and have variable costs of $265 per set.The fixed costs each year will be $9,170,000. The company has alsospent $1,180,000 on research and development for the new clubs. Theplant and equipment required will cost $29,190,000 and will bedepreciated on a straight-line basis. The new clubs will alsorequire an increase in net working capital of $1,370,000 that willbe returned at the end of the project. The tax rate is 30 percent,and the cost of capital is 10 percent.

    

Suppose you feel that the values are accurate to within only ±10percent. What are the best-case and worst-case NPVs?(Hint: The price and variable costs for the two existingsets of clubs are known with certainty; only the sales gained orlost are uncertain.) (Negative amounts should be indicatedby a minus sign. Do not round intermediate calculations and roundyour answers to 2 decimal places, e.g., 32.16.)

  

	NPV
Best-case	$
Worst-case	$