ZTX Co. has decided to sell a new line of golf clubs. The clubs will sell...

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ZTX Co. has decided to sell a new line of golf clubs. The clubswill sell for $783 per set and have a variable cost of $346 perset. The company has spent $151350 for a marketing study thatdetermined the company will sell 74456 sets per year for sevenyears. The marketing study also determined that the company willlose sales of 8724 sets per year of its high-priced clubs. Thehigh-priced clubs sell at $1038 and have variable costs of $516.The company will also increase sales of its cheap clubs by 11687sets per year. The cheap clubs sell for $354 and have variablecosts of $123 per set. The fixed costs each year will be $14636747.The company has also spent $1484057 on research and development forthe new clubs. The plant and equipment required will cost $29783250and will be depreciated on a straight-line basis. The new clubswill also require an increase in net working capital of $2093952that will be returned at the end of the project. The tax rate is 36percent, and the cost of capital is 12 percent. Calculate the NPVfor this project.

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Following two costs are irrelevant costs and hence will not be included into capital budgeting decision The company has spent 151350 for a marketing study sunk not recoverable incurred cant be reversed The company has also spent 1484057 on research and development for the new clubs sunk not recoverable incurred cant be reversed For everything else please see the table See Answer

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ZTX Co. has decided to sell a new line of golf clubs. The clubswill sell for $783 per set and have a variable cost of $346 perset. The company has spent $151350 for a marketing study thatdetermined the company will sell 74456 sets per year for sevenyears. The marketing study also determined that the company willlose sales of 8724 sets per year of its high-priced clubs. Thehigh-priced clubs sell at $1038 and have variable costs of $516.The company will also increase sales of its cheap clubs by 11687sets per year. The cheap clubs sell for $354 and have variablecosts of $123 per set. The fixed costs each year will be $14636747.The company has also spent $1484057 on research and development forthe new clubs. The plant and equipment required will cost $29783250and will be depreciated on a straight-line basis. The new clubswill also require an increase in net working capital of $2093952that will be returned at the end of the project. The tax rate is 36percent, and the cost of capital is 12 percent. Calculate the NPVfor this project.