Consider two mutually exclusive new product launch projects that Nagano Golf is considering. Assume the discount rate for both products is 14 percent. Project A: Project B: Nagano NP-30. Professional clubs that will take an initial investment of $580,000 at Year 0. For each of the next 5 years, (Years 1-5), sales will generate a consistent cash flow of $215,000 per year. Year 0 Introduction of new product at Year 6 will terminate further cash flows from this project. Nagano NX-20. High-end amateur clubs that will take an initial investment of $440,000 at Year 0. Cash flow at Year 1 is $130,000. 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 -$580,000-$440,000 NX-20 1 215,000 130,000 234 215,000 143,000 215,000 157,300 215,000 173,030 5 215,000 190,333 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
Consider two mutually exclusive new product launch projects that Nagano Golf is considering. Assume the discount rate for both products is 14 percent. Project A: Project B: Nagano NP-30. Professional clubs that will take an initial investment of $580,000 at Year 0. For each of the next 5 years, (Years 1-5), sales will generate a consistent cash flow of $215,000 per year. Year 0 Introduction of new product at Year 6 will terminate further cash flows from this project. Nagano NX-20. High-end amateur clubs that will take an initial investment of $440,000 at Year 0. Cash flow at Year 1 is $130,000. 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 -$580,000-$440,000 NX-20 1 215,000 130,000 234 215,000 143,000 215,000 157,300 215,000 173,030 5 215,000 190,333 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
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
Related questions
Question
None
Transcribed Image Text:Consider two mutually exclusive new product launch projects that Nagano Golf is
considering. Assume the discount rate for both products is 14 percent.
Project
A:
Project
B:
Nagano NP-30.
Professional clubs that will take an initial investment of $580,000 at Year 0.
For each of the next 5 years, (Years 1-5), sales will generate a consistent cash
flow of $215,000 per year.
Year
0
Introduction of new product at Year 6 will terminate further cash flows from this
project.
Nagano NX-20.
High-end amateur clubs that will take an initial investment of $440,000 at Year
0.
Cash flow at Year 1 is $130,000. 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
-$580,000-$440,000
NX-20
1
215,000
130,000
234
215,000
143,000
215,000
157,300
215,000
173,030
5
215,000
190,333
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
Expert Solution
This question has been solved!
Explore an expertly crafted, step-by-step solution for a thorough understanding of key concepts.
Step by step
Solved in 4 steps with 4 images
Knowledge Booster
Learn more about
Need a deep-dive on the concept behind this application? Look no further. Learn more about this topic, finance and related others by exploring similar questions and additional content below.Recommended textbooks for you
Essentials Of Investments
Finance
ISBN:
9781260013924
Author:
Bodie, Zvi, Kane, Alex, MARCUS, Alan J.
Publisher:
Mcgraw-hill Education,
Essentials Of Investments
Finance
ISBN:
9781260013924
Author:
Bodie, Zvi, Kane, Alex, MARCUS, Alan J.
Publisher:
Mcgraw-hill Education,
Foundations Of Finance
Finance
ISBN:
9780134897264
Author:
KEOWN, Arthur J., Martin, John D., PETTY, J. William
Publisher:
Pearson,
Fundamentals of Financial Management (MindTap Cou…
Finance
ISBN:
9781337395250
Author:
Eugene F. Brigham, Joel F. Houston
Publisher:
Cengage Learning
Corporate Finance (The Mcgraw-hill/Irwin Series i…
Finance
ISBN:
9780077861759
Author:
Stephen A. Ross Franco Modigliani Professor of Financial Economics Professor, Randolph W Westerfield Robert R. Dockson Deans Chair in Bus. Admin., Jeffrey Jaffe, Bradford D Jordan Professor
Publisher:
McGraw-Hill Education