Question

Consider two mutually exclusive new product launch projects that Nagano Golf is considering. Assume the discount rate for both projects is 12 percent.

Project A: Nagano NP-30 Professional clubs that will take an initial investment of $940,000 at Time 0. Introduction of new product at Year 6 will terminate further cash flows from this project.

Project B: Nagano NX-20 High-end amateur clubs that will take an initial investment of $650,000 at Time 0. Introduction of new product at Year 6 will terminate further cash flows from this project.

YEAR	NP-30	NX-20
0	-940,000	-650,000
1	345,000	250,000
2	335,000	250,000
3	310,000	245,000
4	295,000	230,000
5	205,000	175,000

	NP-30	NX-20	IMPLICATIONS
NPV
IRR
Incremental IRR
PI

Answer 1