Nagano np-30

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Consider two mutually exclusive new product launch projects that Nagano Golf is considering. Assume the discount rate for both projects is 13 percent.

Project A: Nagano NP-30.
Professional clubs that will take an initial investment of $950,000 at Time 0. Introduction of new product at Year 6 will terminate further cash flows from this project.

Project B: Nagano NX-20.
High-end amateur clubs that will take an initial investment of $691,000 at Time 0. Introduction of new product at Year 6 will terminate further cash flows from this project.

Year NP-30 NX-20
0 -$ 950,000 -$ 691,000
1 345,000 268,000
2 335,000 273,000
3 310,000 260,000
4 305,000 240,000
5 215,000 186,000

Complete the following table: (Do not round intermediate calculations. Enter the IRR as a percent. Round your profitability index (PI) answers to 3 decimal places (e.g., 32.161) and other answers to 2 decimal places
NP-30 NX-20
NPV $ $
IRR % %
PI
What is the incremental IRR of investing in the larger project? (Do not round intermediate calculations. Enter your answer as a percent rounded to 2 decimal places (e.g., 32.16).)
Incremental IRR %

Reference no: EM13680888

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