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 $830 per set and have a variable cost of $430per set. The company has spent $153,000 for a marketing study thatdetermined the company will sell 57,000 sets per year for sevenyears. The marketing study also determined that the company willlose sales of 9,800 sets of its high-priced clubs. The high-pricedclubs sell at $1,130 and have variable costs of $730. The companywill also increase sales of its cheap clubs by 11,300 sets. Thecheap clubs sell for $470 and have variable costs of $245 per set.The fixed costs each year will be $9,130,000. The company has alsospent $1,140,000 on research and development for the new clubs. Theplant and equipment required will cost $28,910,000 and will bedepreciated on a straight-line basis. The new clubs will alsorequire an increase in net working capital of $1,330,000 that willbe returned at the end of the project. The tax rate is 36 percent,and the cost of capital is 10 percent. Suppose you feel that thevalues are accurate to within only ±10 percent. What are thebest-case and worst-case NPVs? (Hint: The price and variable costsfor the two existing sets of clubs are known with certainty; onlythe sales gained or lost are uncertain.) (Negative amounts shouldbe indicated by a minus sign. Do not round intermediatecalculations and round your answers to 2 decimal places, e.g.,32.16.). Best-case: Worst case:

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McGilla Golf has decided to sell a new line of golf clubs. Theclubs will sell for $830 per set and have a variable cost of $430per set. The company has spent $153,000 for a marketing study thatdetermined the company will sell 57,000 sets per year for sevenyears. The marketing study also determined that the company willlose sales of 9,800 sets of its high-priced clubs. The high-pricedclubs sell at $1,130 and have variable costs of $730. The companywill also increase sales of its cheap clubs by 11,300 sets. Thecheap clubs sell for $470 and have variable costs of $245 per set.The fixed costs each year will be $9,130,000. The company has alsospent $1,140,000 on research and development for the new clubs. Theplant and equipment required will cost $28,910,000 and will bedepreciated on a straight-line basis. The new clubs will alsorequire an increase in net working capital of $1,330,000 that willbe returned at the end of the project. The tax rate is 36 percent,and the cost of capital is 10 percent. Suppose you feel that thevalues are accurate to within only ±10 percent. What are thebest-case and worst-case NPVs? (Hint: The price and variable costsfor the two existing sets of clubs are known with certainty; onlythe sales gained or lost are uncertain.) (Negative amounts shouldbe indicated by a minus sign. Do not round intermediatecalculations and round your answers to 2 decimal places, e.g.,32.16.). Best-case: Worst case:

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