Already have an account? Get multiple benefits of using own account!
Login in your account..!
Remember me
Don't have an account? Create your account in less than a minutes,
Forgot password? how can I recover my password now!
Enter right registered email to receive password!
Gorilla Golf has decided to sell a new line of golf clubs. The clubs will sell for $650 per set and have a variable cost of $320 per set. The company has spent $150,000 for a marketing study that determined the company will sell 55,000 sets per year for seven years, where seven years is the life of the project. The marketing study also determined that the company will lose sales of 13,000 sets per year of its high-priced clubs. The high-priced clubs sell at $1,100 and have variable costs of $600. The company will also increase sales of its cheap clubs by 10,000 sets per year. The cheap clubs sell for $400 and have variable costs of $180 per set. The fixed costs each year will be $7,500,000. The company has also spent $1,000,000 on research and development for the new clubs. The plant and equipment required will cost $18,200,000 and will be depreciated on a straight-line basis over the life of the project. The new clubs will also require an increase in net working capital of $950,000 that will be returned at the end of the project. The tax rate is 40 percent. Due to the extremely competitive and, therefore, risky nature of the golf club business the cost of capital is estimated to be 16 percent. Gorilla Golf would like to know the sensitivity of NPV to changes in the price of the new clubs and the quantity of new clubs sold. What is the sensitivity of the NPV to each of these variables?
What is the proper cash flow to use to evaluate the present value of the introduction of the new chip?
What is your recommendation and justification for, in percentage terms, The asset classes are U.S. Treasury bonds, U.S. equities and cash.
What do you expect the prices of these bonds to be in 14 years?
How sensitive is return on capital to the forecast assumptions in case Exhibit 8? What independent changes in Carrie Galeotafiore’s estimates are required to drive the 2002 return-on-capital estimate below Home Depot’s cost-of-capital estimate of 12...
What is the probability of completing the project in no more than 60 weeks?
Illinois Industries has decided to borrow money by issuing perpetual bonds with a coupon rate of 9.0 percent, payable annually. The one-year interest rate is 9.0 percent. What will the market value of these bonds be if they are noncallable? What will..
John’s son will be going to college in 8 years. John want’s to have a fund that will provide him $12,000 per year (end of year) for each of his son’s five years in college. How much must he put into that fund today if the fund will earn 12 percent in..
Howell Corporation produces an executive jet for which it currently manufactures a fuel valve; the cost of the valve is indicated below: Cost per Unit Variable costs Direct material $940 Direct labor 600 Variable overhead 300 Fixed costs Depreciation..
What are one or two advantages of taking out commercial loans to a company over issuing stocks and bonds and why?
Find an article through ProQuest which discusses the differences between government and private sector accounting and finance. With your article and the assigned readings for the week, discuss the differences in government and private sector accounti..
Mersey Chemicals manufactures polypropylene that it ships to its customers via tank car. Currently it plans to add two additional tank cars to its fleet four years from now.? When evaluating the proposed expansion, what incremental free cash flows sh..
Which of the following is not a measure of the risk on a stock?
Get guaranteed satisfaction & time on delivery in every assignment order you paid with us! We ensure premium quality solution document along with free turntin report!
whatsapp: +1-415-670-9521
Phone: +1-415-670-9521
Email: [email protected]
All rights reserved! Copyrights ©2019-2020 ExpertsMind IT Educational Pvt Ltd