Question Details
Consider two mutually exclusive new product launch projects that
Nagano Golf is considering. Assume the discount rate for Nagano
Golf is 14 percent. (Do not round intermediate
calculations. Round your "PI" answers to 3 decimal places (e.g.,
32.161) and other answers to 2 decimal places. (e.g.,
32.16))
|
Project A: | Nagano NP-30. |
Professional clubs that will
take an initial investment of $650,000 at time 0. | |
Next five years (Years 1Ac??o5) of
sales will generate a consistent cash flow of $285,000 per
year. | |
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 $680,000 at Time 0. | |
Cash flow at Year 1 is $200,000. In each subsequent year cash
flow will grow at 10 percent per year.
| |
Introduction of new product at
Year 6 will terminate further cash flows from this project. |
Year
|
NP-30
|
NX-20
| ||||
0
|
Ac??o$
|
650,000
|
|
Ac??o$
|
680,000
| |
1
|
|
285,000
|
|
200,000
| ||
2
|
|
285,000
|
|
220,000
| ||
3
|
|
285,000
|
|
242,000
| ||
4
|
|
285,000
|
|
266,200
| ||
5
|
|
285,000
|
|
292,820
|
Complete the following
table: |
NX-30 |
NX-20 | ||||||
Payback | years | years | |||||
IRR | % | % | |||||
PI | |||||||
NPV | $ | $ | |||||
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DATE ANSWEREDDec 08, 2020
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