In: Finance
Suppose that Calloway golf would like to capitalize on Phil Michelson winning the Open Championship in 2013 by releasing a new putter. The new product will require new equipment for $410,451.00 that will be depreciated using the 5-year MACRS schedule. The project will run for 2 years with the following forecasted numbers:
Year 1 | Year 2 | |
---|---|---|
Putter price | $64.13 | $64.13 |
Units sold | 18,255.00 | 11,608.00 |
COGS | 42.00% of sales | 42.00% of sales |
Selling and Administrative | 21.00% of sales | 21.00% of sales |
Calloway has a 13.00% cost of capital and a 37.00% tax rate. The
firm expects to sell the equipment after 2 years for a NSV of
$125,682.00.
What is the NPV of the project?