Sunk costs and opportunity costs

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Reference no: EM131595165

Masters Golf? Products, Inc., spent 44 years and $ 1 comma 110 comma 000$1,110,000 to develop its new line of club heads to replace a line that is becoming obsolete. To begin manufacturing? them, the company will have to invest $ 1 comma 750 comma 000$1,750,000 in new equipment. The new clubs are expected to generate an increase in operating cash inflows of $ 751 comma 000$751,000 per year for the next 1414 years. The company has determined that the existing line could be sold to a competitor for $ 249 comma 000$249,000. a. How should the $ 1 comma 110 comma 000$1,110,000 in development costs be? classified? b. How should the $ 249 comma 000$249,000 sale price for the existing line be? classified? c. What are all the relevant cash flows for years 0 thru 1414?? ?(Note: Assume that all of these numbers are net of? taxes.)

Reference no: EM131595165

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