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 $865 per set and have a variable cost of $425per set. The company has spent $340,000 for a marketing study thatdetermined the company will sell 70,600 sets per year for sevenyears. The marketing study also determined that the company willlose sales of 13,800 sets of its high-priced clubs. The high-pricedclubs sell at $1,235 and have variable costs of $695. The companywill also increase sales of its cheap clubs by 15,800 sets. Thecheap clubs sell for $455 and have variable costs of $245 per set.The fixed costs each year will be $10,750,000. The company has alsospent $2,900,000 on research and development for the new clubs. Theplant and equipment required will cost $39,200,000 and will bedepreciated on a straight-line basis. The new clubs will alsorequire an increase in net working capital of $3,600,000 that willbe returned at the end of the project. The tax rate is 24 percent,and the cost of capital is 12 percent.
a. Calculate the payback period. (Do not round intermediatecalculations and round your answer to 3 decimal places, e.g.,32.161.)
b. Calculate the NPV. (Do not round intermediate calculationsand round your answer to 2 decimal places, e.g., 32.16.)
c. Calculate the IRR. (Do not round intermediate calculationsand enter your answer as a percent rounded to 2 decimal places,e.g., 32.16.)

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McGilla Golf has decided to sell a new line of golf clubs. Theclubs will sell for $865 per set and have a variable cost of $425per set. The company has spent $340,000 for a marketing study thatdetermined the company will sell 70,600 sets per year for sevenyears. The marketing study also determined that the company willlose sales of 13,800 sets of its high-priced clubs. The high-pricedclubs sell at $1,235 and have variable costs of $695. The companywill also increase sales of its cheap clubs by 15,800 sets. Thecheap clubs sell for $455 and have variable costs of $245 per set.The fixed costs each year will be $10,750,000. The company has alsospent $2,900,000 on research and development for the new clubs. Theplant and equipment required will cost $39,200,000 and will bedepreciated on a straight-line basis. The new clubs will alsorequire an increase in net working capital of $3,600,000 that willbe returned at the end of the project. The tax rate is 24 percent,and the cost of capital is 12 percent.a. Calculate the payback period. (Do not round intermediatecalculations and round your answer to 3 decimal places, e.g.,32.161.)b. Calculate the NPV. (Do not round intermediate calculationsand round your answer to 2 decimal places, e.g., 32.16.)c. Calculate the IRR. (Do not round intermediate calculationsand enter your answer as a percent rounded to 2 decimal places,e.g., 32.16.)