MGM Co. had decided to sell a new line of golf clubs. The clubswill sell for $850 per set and have a variable cost of $400 perset. The company has spent $300,000 for a marketing study thatdetermined the company will sell 68,500 sets per year for sevenyears. The marketing study also determined that the company willlose sales of 12,400 sets of its high-priced clubs. The high-pricedclubs sell at $1,200 and have variable costs of $660. The companywill also increase sales of its cheap clubs by 14,400 sets. Thecheap clubs sell for $420 and have variable costs of $210 per set.The fixed costs each year will be $10,400,000. The company has alsospent $2,500,000 on research and development for the new clubs. Theplant and equipment required will cost $38,500,000 and will bedepreciated on a straight-line basis. The new clubs will alsorequire an increase in net working capital of $2,900,000 that willbe returned at the end of the project. The tax rate is 21 percent,and the cost of the capital is 12 percent.

Suppose you feel that the values are accurate to within ±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.)