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McGilla Golf has decided to sell a new line of golf clubs. Thecompany would like to know the sensitivity of NPV to changes in theprice of the new clubs and the quantity of new clubs sold. Theclubs will sell for $790 per set and have a variable cost of $350per set. The company has spent $190,000 for a marketing study thatdetermined the company will sell 64,000 sets per year for sevenyears. The marketing study also determined that the company willlose sales of 10,800 sets of its high-priced clubs. The high-pricedclubs sell at $1,160 and have variable costs of $620. The companywill also increase sales of its cheap clubs by 12,800 sets. Thecheap clubs sell for $380 and have variable costs of $170 per set.The fixed costs each year will be $10,000,000. The company has alsospent $1,400,000 on research and development for the new clubs. Theplant and equipment required will cost $37,700,000 and will bedepreciated on a straight-line basis. The new clubs will alsorequire an increase in net working capital of $2,100,000 that willbe returned at the end of the project. The tax rate is 24 percent,and the cost of capital is 12 percent. What is the sensitivity ofthe NPV to each of these variables? (Do not roundintermediate calculations and round your answers to 2 decimalplaces, e.g., 32.16.)
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