Suppose that Calloway golf would like to capitalize on Phil Michelson winning the Open Championship...
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Suppose that Calloway golf would like to capitalize on Phil Michelson winning the Open Championship in 2013 by releasing a new putter. The new product will require new equipment for $402,656.00 that will be depreciated using the 5-year MACRS schedule. The project will run for 2 years with the following forecasted numbers:
| Year 1 | Year 2 | |
|---|---|---|
| Putter price | $61.40 | $61.40 |
| Units sold | 19,812.00 | 11,852.00 |
| COGS | 41.00% of sales | 41.00% of sales |
| Selling and Administrative | 19.00% of sales | 19.00% of sales |
Calloway has a 14.00% cost of capital and a 40.00% tax rate. The firm expects to sell the equipment after 2 years for a NSV of $145,713.00.
What is the project cash flow for year 1?
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