Consider two mutually exclusive new product launch projects that Nagano Golf' is considering. Assume the discount rate for both products is 15 percent. Project A:Nagano NP-30. Professional clubs that will take an initial investment of $675,000 at Year 0. For each of the next 5 years (Years 1-5), sales will generate a consistent cash flow of $224,000 per year. Introduction of new product at Year 6 will terminate further cash flows from this project. Project B:Nagano NX-20. Year 012345 High-end amateur clubs that will take an initial investment of $430,000 at Year 0. Cash flow at Year 1 is $125,000. In each subsequent year, cash flow will grow at 10 percent per year. Introduction of new product at Year 6 will terminate further cash flows from this project. NP-30 -$675,000 NX-20 -$430,000 224,000 125,000 224,000 137,500 224,000 151,250 224,000 166,375 183,013 224,000 Complete the following table: (Do not round intermediate calculations. Round your "PI" answers to 3 decimal places, e.g., 32.161, and other answers to 2 decimal places, e.g., 32.16. Enter your IRR answers as a percent.) NP-30 NX-20 Payback years years IRR % % PI NPV
Consider two mutually exclusive new product launch projects that Nagano Golf' is considering. Assume the discount rate for both products is 15 percent. Project A:Nagano NP-30. Professional clubs that will take an initial investment of $675,000 at Year 0. For each of the next 5 years (Years 1-5), sales will generate a consistent cash flow of $224,000 per year. Introduction of new product at Year 6 will terminate further cash flows from this project. Project B:Nagano NX-20. Year 012345 High-end amateur clubs that will take an initial investment of $430,000 at Year 0. Cash flow at Year 1 is $125,000. In each subsequent year, cash flow will grow at 10 percent per year. Introduction of new product at Year 6 will terminate further cash flows from this project. NP-30 -$675,000 NX-20 -$430,000 224,000 125,000 224,000 137,500 224,000 151,250 224,000 166,375 183,013 224,000 Complete the following table: (Do not round intermediate calculations. Round your "PI" answers to 3 decimal places, e.g., 32.161, and other answers to 2 decimal places, e.g., 32.16. Enter your IRR answers as a percent.) NP-30 NX-20 Payback years years IRR % % PI NPV
Essentials Of Investments
11th Edition
ISBN:9781260013924
Author:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.
Publisher:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.
Chapter1: Investments: Background And Issues
Section: Chapter Questions
Problem 1PS
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Transcribed Image Text:Consider two mutually exclusive new product launch projects that Nagano Golf' is
considering. Assume the discount rate for both products is 15 percent.
Project A:Nagano NP-30.
Professional clubs that will take an initial investment of $675,000 at Year O.
For each of the next 5 years (Years 1-5), sales will generate a consistent cash flow of
$224,000 per year.
Introduction of new product at Year 6 will terminate further cash flows from this project.
Project B:Nagano NX-20.
Year
High-end amateur clubs that will take an initial investment of $430,000 at Year O.
Cash flow at Year 1 is $125,000. In each subsequent year, cash flow will grow at 10
percent per year.
Introduction of new product at Year 6 will terminate further cash flows from this project.
NP-30
-$675,000
NX-20
012345
-$430,000
224,000
125,000
224,000
137,500
3
224,000
151,250
224,000
166,375
224,000
183,013
Complete the following table: (Do not round intermediate calculations. Round your "PI"
answers to 3 decimal places, e.g., 32.161, and other answers to 2 decimal places, e.g.,
32.16. Enter your IRR answers as a percent.)
NP-30
NX-20
Payback
IRR
years
%
years
%
PI
NPV
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