Question

ZTX Co. has decided to sell a new line of golf clubs. The clubs will sell for $730 per set and have a variable cost of $346 per set. The company has spent $160,082 for a marketing study that determined the company will sell 79,245 sets per year for seven years. The marketing study also determined that the company will lose sales of 8,043 sets per year of its high-priced clubs. The high-priced clubs sell at $1,153 and have variable costs of $596. The company will also increase sales of its cheap clubs by 10,932 sets per year. The cheap clubs sell for $361 and have variable costs of $142 per set. The fixed costs each year will be $13,739,926. The company has also spent $1,036,883 on research and development for the new clubs. The plant and equipment required will cost $29,101,015 and will be depreciated on a straight-line basis. The new clubs will also require an increase in net working capital of $2,141,276 that will be returned at the end of the project. The tax rate is 40 percent, and the cost of capital is 14 percent. Calculate the NPV for this project. Answer in $ to two decimals.

Answer 1

Based on the given data, pls find below calculations:

NPV is postive and is $ 13019117 and is recommended to be accepted.