Assignment

McGilla Golf has decided to sell a new line of golf clubs. The clubs will sell for $$965$ per set and have a variable cost of $$487$ per set. The company has spent $$340,000$ for a marketing study that determined the company will sell $94,000$ sets per year for seven years. The marketing study also determined that the company will lose sales of $9,300$ sets per year of its high$-$priced clubs. The high$-$priced clubs sell at $$1,395$ and have variable costs of $$715.$ The company will also increase sales of its cheap clubs by $12,200$ sets per year. The cheap clubs sell for $$396$ and have variable costs of $$183$ per set. The fixed costs each year will be $$15,750,000.$ The company has also spent $$2,900,000$ on research and development for the new clubs. The plant and equipment required will cost $$59,100,000$ and will be depreciated on a straight$-$line basis. The new clubs will also require an increase in net working capital of $$4,325,000$ that will be returned at the end of the project. The tax rate is $24$ percent, and the cost of capital is $13$ percent. Calculate the payback period, the NPV$,$ and the IRR.

$(30$ marks$)$