Reference no: EM132037414

McGilla Golf has decided to sell a new line of golf clubs. The clubs will sell for $829 per set and have a variable cost of $410 per set. The company has spent $139700 for a marketing study that determined the company will sell 5412 sets per year for seven years. The marketing study also determined that the company will lose sales of 925 sets of its high-priced clubs. The high-priced clubs sell at $1091 and have variable costs of $662. The company will also increase sales of its cheap clubs by 1083 sets. The cheap clubs sell for $420 and have variable costs of $231 per set. The fixed costs each year will be $883860. The company has also spent $113334 on research and development for the new clubs. The plant and equipment required will cost $2876618 and will be depreciated on a straight-line basis. The new clubs will also require an increase in net working capital of $129567 that will be returned at the end of the project. The tax rate is 31 percent, and the cost of capital is 9 percent. What is the sensitivity of the NPV to changes in the price of the new clubs?