# The high priced and have variable costs of 600 the

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marketing study also determined that the company will lose sales of 8,500 sets of its high-priced clubs. The high-priced and have variable costs of \$600. The company will also increase sales of its cheap clubs by 10,000 sets. The cheap clu have variable costs of \$180 per set. The fixed costs each year will be \$9,000,000. The company has also spent \$1,010 development for the new clubs. The plant and equipment required will cost \$28,000,000 and will be depreciated on a st new clubs will also require an increase in net working capital of \$1,200,000 that will be returned at the end of the projec percent, and the cost of capital is 10 percent. Suppose you feel that the values are accurate to within only ±10 percent. What are the best-case and worst-case N and variable costs for the two existing sets of clubs are known with certainty; only the sales gained or lost are amounts should be indicated by a minus sign. Do not round intermediate calculations and round your an places, e.g., 32.16.) NPV Best-case \$ Worst-case \$ 11 McGilla Golf has decided to sell a new line of golf clubs. The company would like to know the sensitivity of NPV to of the new clubs and the quantity of new clubs sold. The clubs will sell for \$780 per set and have a variable cost company has spent \$148,000 for a marketing study that determined the company will sell 52,000 sets per year marketing study also determined that the company will lose sales of 9,300 sets of its high-priced clubs. The high-price and have variable costs of \$680. The company will also increase sales of its cheap clubs by 10,800 sets. The cheap c have variable costs of \$220 per set. The fixed costs each year will be \$9,080,000. The company has also spent \$1,090 development for the new clubs. The plant and equipment required will cost \$28,560,000 and will be depreciated on a s new clubs will also require an increase in net working capital of \$1,280,000 that will be returned at the end of the proje percent, and the cost of capital is 10 percent. What is the sensitivity of the NPV to each of these variables? (Do not calculations and round your final answers to 2 decimal places, e.g., 32.16.) NPV ΔNPV/ΔP \$
ΔNPV/ΔQ \$ 12 Consider a project to supply Detroit with 30,000 tons of machine screws annually for automobile production. Y \$4,000,000 investment in threading equipment to get the project started; the project will last for three years. The ac estimates that annual fixed costs will be \$700,000 and that variable costs should be \$200 per ton; accounting will dep asset investment straight-line to zero over the three-year project life. It also estimates a salvage value of \$440,000 af The marketing department estimates that the automakers will let the contract at a selling price of \$320 per ton. The en estimates you will need an initial net working capital investment of \$400,000. You require a return of 11 percent and fa of 30 percent on this project.

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• Summer '16
• intermediate calculations

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