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MGM Co. has 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. Thehigh-priced clubs sell at $1,200 and have variable costs of $660.The company will also increase sales of its cheap clubs by 14,400sets. The cheap clubs sell for $420 and have variable costs of $210per set. The fixed costs each year will be $10,400,000. The companyhas also spent $2,500,000 on research and development for the newclubs. The plant and equipment required will cost $38,500,000 andwill be depreciated on a straight-line basis. The new clubs willalso require an increase in net working capital of $2,900,000 thatwill be returned at the end of the project. The tax rate is 21percent, and the cost of capital is 12 percent.

Suppose you feel that the values are accurate to within only+/-10 percent. What are the best-case and worst-case NPVs? (Hint:The price and variable costs for the two existing sets of clubs areknown with certainty; only the sales gained or lost areuncertain.)