Suppose that Calloway golf would like to capitalize on Phil Michelson winning the Open Championship in...

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Suppose that Calloway golf would like to capitalize on PhilMichelson winning the Open Championship in 2013 by releasing a newputter. The new product will require new equipment for $420,494.00that will be depreciated using the 5-year MACRS schedule. Theproject will run for 2 years with the following forecastednumbers:
Year 1 Year 2
Putter price $60.65 $60.65
Units sold 19,049.00 10,768.00
COGS 39.00% of sales 39.00% of sales
Selling and Administrative 19.00% of sales 19.00% of sales

Calloway has a 14.00% cost of capital and a 37.00% tax rate. Thefirm expects to sell the equipment after 2 years for a NSV of$166,135.00.
What is the project cash flow for year 1?
What is the project cash flow for year 2? (include the terminalcash flow here)
What is the NPV of the project?

	Year 1	Year 2
Putter price	$60.65	$60.65
Units sold	19,049.00	10,768.00
COGS	39.00% of sales	39.00% of sales
Selling and Administrative	19.00% of sales	19.00% of sales

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3.9 Ratings (618 Votes)

Answer 1 Answer 3 Calculation of Projects cash flow For Year 1 Calculation of NPV of project Year 1 Year Cash flow Discount Factor 14 Present Value Units sold 19049 0 420494 1 420494 x Putter price per unit 6065 1 336815 0877193 See Answer

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Suppose that Calloway golf would like to capitalize on PhilMichelson winning the Open Championship in 2013 by releasing a newputter. The new product will require new equipment for $420,494.00that will be depreciated using the 5-year MACRS schedule. Theproject will run for 2 years with the following forecastednumbers:Year 1Year 2Putter price$60.65$60.65Units sold19,049.0010,768.00COGS39.00% of sales39.00% of salesSelling and Administrative19.00% of sales19.00% of salesCalloway has a 14.00% cost of capital and a 37.00% tax rate. Thefirm expects to sell the equipment after 2 years for a NSV of$166,135.00.What is the project cash flow for year 1?What is the project cash flow for year 2? (include the terminalcash flow here)What is the NPV of the project?