Question

A) McGilla Golf has decided to sell a new line of golf clubs. The length of this project is seven years. The company has spent $188569 on research and development for the new clubs. The plant and equipment required will cost $2838154 and will be depreciated on a straight-line basis. The new clubs will also require an increase in net working capital of $125395 that will be returned at the end of the project. The OCF of the project will be $810877. The tax rate is 32 percent, and the cost of capital is 7 percent. What is the NPV for this project? (Negative amount should be indicated by a minus sign. Round your final answer to the nearest dollar amount. Omit the "$" sign and commas in your response. For example, $123,456.78 should be entered as 123457.)

B) McGilla Golf has decided to sell a new line of golf clubs. The length of this project is seven years. The company has spent $1110000 on research and development for the new clubs. The plant and equipment required will cost $28842213 and will be depreciated on a straight-line basis. The new clubs will also require an increase in net working capital of $1271594 that will be returned at the end of the project. The OCF of the project will be $8397763. The tax rate is 32 percent. What is the IRR for this project?(Enter your answer as a percentage, omit the "%" sign in your response, and round your answer to 2 decimal places. For example, 0.12345 or 12.345% should be entered as 12.35.)

Answer 1