**Case Study: Evaluating a New Product Launch in the Golf Industry****Project Overview**Calloway Golf aims to leverage Phil Michelson's 2013 Open Championship victory by launching a new putter. The initiative requires an investment in new equipment worth $403,915, subject to depreciation using a 5-year MACRS schedule. The project is projected to last two years, with anticipated financial outcomes outlined below.**Financial Projections**| Metric | Year 1 | Year 2 ||----------------------------|------------|------------|| Putter Price | $64.95 | $64.95 || Units Sold | 18,393 | 10,084 || COGS (Cost of Goods Sold) | 39.00% of sales | 39.00% of sales || Selling and Administrative | 21.00% of sales | 21.00% of sales |**Financial Parameters**- Cost of Capital: 13.00%- Tax Rate: 39.00%- Expected Sale of Equipment after 2 years: NSV of $136,159.00**Discussion**The objective is to determine the Net Present Value (NPV) of the project, considering the specified financial metrics and constraints. The project will analyze cash flows generated from sales and expenses, adjusted by tax implications, to assess profitability.**Question**What is the NPV of the project?This case study provides a practical scenario for understanding investment decisions, financial forecasting, and evaluating capital projects using NPV in the context of new product launches.

NPV is also known as Net Present Value.. It is a capital budgeting technique which helps in decision…

Answered: Suppose that Calloway golf would like…

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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k Better Mousetraps has developed a new trap. It can go into production for an initial investment in equipment of $5.4 million. The equipment will be depreciated straight-line over 6 years, but, in fact, it can be sold after 6 years for $584,000. The firm believes that working capital at each date must be maintained at a level of 10% of next year's forecast sales. The firm estimates production costs equal to $1.30 per trap and believes that the traps can be sold for $5 each. Sales forecasts are given in the following table. The project will come to an end in 6 years, when the trap becomes technologically obsolete. The firm's tax bracket is 40%, and the required rate of return on the project is 10%. Year: Sales (millions of traps) Increase in NPV I 6 0 VERLUNDAE 1 0.6 million 2 0.7 0.8 4 Suppose the firm can cut its requirements for working capital in half by using better inventory control systems. By how much will this increase project NPV? Note: Do not round your intermediate…
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Rocky Pines golf course is planning for the coming season. Investors would like to earn a 12% return on the company's $47,000,000 of assets. The company primarily incurs fixed costs to groom the greens and fairways Fixed costs are projected to be $20,000,000 for the golfing season About 450,000 golfers are expected each year. Variable costs are about $20 per golfer Rocky Pines golf course has a favorable reputation in the area and therefore, has some control over the price of a round of golf. Using a cost-plus approach, what price should the course charge for a round of golf? (Round the final answer to the nearest cent) OA $110.00 OB$76.98 OC $20.00 OD 564 44

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