What is the sensitivity of the npv to changes

Reference no: EM131996267

Question: McGilla Golf has decided to sell a new line of golf clubs. The clubs will sell for $755 per set and have a variable cost of $439 per set. The company has spent $114913 for a marketing study that determined the company will sell 5552 sets per year for seven years. The marketing study also determined that the company will lose sales of 928 sets of its high-priced clubs. The high-priced clubs sell at $1035 and have variable costs of $726. The company will also increase sales of its cheap clubs by 1175 sets. The cheap clubs sell for $477 and have variable costs of $227 per set. The fixed costs each year will be $900599. The company has also spent $110934 on research and development for the new clubs. The plant and equipment required will cost $2859691 and will be depreciated on a straight-line basis. The new clubs will also require an increase in net working capital of $130808 that will be returned at the end of the project. The tax rate is 32 percent, and the cost of capital is 8 percent. What is the sensitivity of the NPV to changes in the quantity of the new clubs sold?

Reference no: EM131996267

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