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

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 $419,490.00 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 $64.74 $64.74
Units sold 19,211.00 11,977.00
COGS 41.00% of sales 41.00% of sales
Selling and Administrative 20.00% of sales 20.00% of sales


Calloway has a 13.00% cost of capital and a 38.00% tax rate. The firm expects to sell the equipment after 2 years for a NSV of $172,665.00.

a)What is the project cash flow for year 1?

b)What is the project cash flow for year 2? (include the terminal cash flow here)

c)What is the NPV of the project?

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